Guidelines for the grant of FCDU loans to exporters

CBP CIRCULAR LETTER Series of 1992

GUIDELINES FOR THE GRANT OF FCDU LOANS TO EXPORTERS

The following guidelines shall be observed in the grant of Foreign Currency Deposit Unit (FCDU) loans to exporters under Central Bank (CB) Circular No. 1317 dated December 11, 1991:

1. Interest rates that may be charged on the loans shall be reflective of prevailing rates in the international capital market.

2. An FCDU loan may be rolled over up to 360 days from date of availment provided payment period in the covering export letter of credit (L/C), purchase order (P.O.) or sales contract (S.C.) is correspondingly extended. The L/C, P.O., S.C. originally used as the basis for an FCDU loan may be substituted by another L/C, P.O., S.C. for purposes of the roll-over provided that it is with the same buyer and the payment period of the substitute instruments shall not exceed 360 days reckoned from date of the original availment.

3. The lending bank shall indicate in the Export Declaration With Foreign Exchange Proceeds (CBP Form No. 6-21-02, Revised 1991) covering the particular export shipment, the amount specifically applied for payment of the loan granted.

4. DLC may grant export rediscounting financing on a particular export L/C, P.O. or S.C. only on the balance not financed by an FCDU loan and such rediscounting financing shall be coursed thru the bank which granted the FCDU loan, provided that the maximum term, including roll-overs, of such rediscounting shall be 180 days and any substitution of the assigned L/C, P.O. or S.C. shall be reported to the CB Department of Loans and Credit within five (5) days from date of substitution.

5. All applications for export rediscounting filed with the CB Department of Loans and Credit (DLC) shall be accompanied by a certification by applicant bank as to amount of FCDU loan granted, if any, on the assigned L/C, P.O., or S.C.

6. The Report on short-term Foreign Loans Granted to Exporters under CB Circular No. 1317 (IOS Form 4A, as amended 1991, attached) shall be submitted weekly by the FCDU to the CB Management of External Debt Department (Attention: Statistical Monitoring Group II), copy furnished the CB Export Department (Attention: Export Financing and Promotions Group) with the following documents:

a. Certified true copy of the export L/C, P.O. or S.C.; and

b. Written undertaking by the exporter that the proceeds of the loan shall be used exclusively for export-related expenses.

Loans reported under said Form need not be included in the Consolidated Report on Loans under CB Circular No. 343/547 (IOS Form 4) submitted monthly by local commercial banks.

7. Any exporter which shall divert the FCDU loan proceeds from the purpose intended or violates CB export rules shall be disqualified from CB rediscounting as well as from obtaining subsequent FCDU loans.

8. Banks, their directors and/or officers violating CB Circular No. 1317 or this Circular-Letter shall likewise be subject to the penal/administrative sanctions under Sections 34 and 34-A of R.A. No. 265, as amended. This Circular-Letter shall take effect immediately and supersedes Circular-Letter dated November 20, 1990 on the same captioned subject.

JUAN QUINTOS, JR. Deputy Governor