Article 138p. 138

COMMERCIAL LAWS NEGOTIABLE INSTRUMENTS, CORPORATION, INSURANCE, TRANSPORTATION, BANKING

the bank's networth, outstanding liabilities, actual and

contingent, or such other financial or performance ratios

as may be appropriate under the circumstances. Any

such determination of net assets and net liabilities shall

be

applied

to

all

banks

uniformly

and

without

discrimination.

SECTION

77.

Requirement

of

Balanced

Currency

Position . — The Monetary Board may require the banks

to maintain a balanced position between their assets and

liabilities in Philippine pesos or in any other currency or

currencies in which they operate. The banks shall be

granted a reasonable period of time in which to adjust

their currency positions to any such requirement.

The powers granted under this section shall be exercised

only

when

special

circumstances make such action

necessary, in the opinion of the Monetary Board, and shall

be applied to all banks alike and without discrimination.

SECTION

78.

Regulation

of

Non-spot

Exchange

Transactions . — In order to restrain the banks from

taking

speculative

positions

with

respect

to

future

fluctuations in foreign exchange rates, the Monetary

Board

may

issue

such

regulations

governing

bank

purchases and sales of non-spot exchange as it may

consider necessary for said purpose.

SECTION 79. Other Exchange Profits and Losses . — The

banks shall bear the risks of non-compliance with the

terms

of

the

foreign

exchange

documents

and

instruments which they buy or sell, and shall also bear

any other typically commercial or banking risks, including

exchange risks not assumed by the Bangko Sentral

under the provisions of the preceding section.

SECTION 80. Information on Exchange Operations . —

The banks shall report to the Bangko Sentral the volume

and composition of their purchases and sales of gold and

foreign

exchange

each

day, and must furnish such

additional

information

as

the

Bangko

Sentral

may

request

with

reference

to

the

movements

in

their

accounts in foreign currencies.

The Monetary Board may also require other persons and

entities

to

report

to

it

currently

all transactions or

operations in gold, in any shape or form, and in foreign

exchange whether entered into or undertaken by them

directly or through agents, or to submit such data as may

be required on operations or activities giving rise to or in

connection with or relating to a gold or foreign exchange

transaction. The Monetary Board shall prescribe the forms

on which such declarations must be made. The accuracy

of the declarations may be verified by the Bangko Sentral

by whatever inspection it may deem necessary.

ARTICLE IV Loans to Banking and Other

Financial Institutions

A. Credit Policy

SECTION

81. Guiding Principles . — The rediscounts,

discounts, loans and advances which the Bangko Sentral

is authorized to extend to banking institutions under the

provisions of the present article of this Act shall be used

to influence the volume of credit consistent with the

objective of price stability.

B. Normal Credit Operations

SECTION 82. Authorized Types of Operations . — Subject

to the principle stated in the preceding section of this

Act, the Bangko Sentral may normally and regularly carry

on

the

following

credit

operations

with

banking

institutions operating in the Philippines:

(a) Commercial credits . — The Bangko Sentral may

rediscount, discount, buy and sell bills, acceptances,

promissory

notes and other credit instruments with

maturities of not more than one hundred eighty (180)

days from the date of their rediscount, discount or

acquisition by the Bangko Sentral and resulting from

transactions related to:

(1)

the importation, exportation, purchase or sale of

readily

saleable

goods

and

products,

or

their

transportation within the Philippines; or

(2) the storing of non-perishable goods and products

which are duly insured and deposited, under conditions

assuring

their

preservation,

in

authorized

bonded

warehouses or in other places approved by the Monetary

Board.

(b)

Production

credits .

—

The

Bangko Sentral may

rediscount, discount, buy and sell bills, acceptances,

promissory notes and other credit instruments having

maturities of not more than three hundred sixty (360)

days from the date of their rediscount, discount of

acquisition by the Bangko Sentral and resulting from

transactions related to the production or processing of

agricultural,

animal,

mineral,

or

industrial

products.

Documents or instruments acquired in accordance with

this subsection shall be secured by a pledge of the

respective crops or products: Provided, however , That the

crops or products need not be pledged to secure the

documents if the original loan granted by the Bangko

Sentral is secured by a lien or mortgage on real estate

property seventy percent (70%) of the appraised value of

which equals or exceeds the amount of the loan granted.

(c)

Other

credits .

—

Special

credit

instruments not

otherwise

rediscountable

under

the

immediately

preceding subsections (a) and (b) may be eligible for

rediscounting in accordance with rules and regulations

which the Bangko Sentral shall prescribe. Whenever

necessary, the Bangko Sentral shall provide funds from

non-inflationary sources: Provided, however , That the

Monetary Board shall prescribe additional safeguards for

disbursing these funds.

(d) Advances . — The Bangko Sentral may grant advances

against the following kinds of collaterals for fixed periods

which, with the exception of advances against collateral

named in clause (4) of the present subsection, shall not

exceed one hundred eighty (180) days:

(1) gold coins or bullion;

(2) securities representing obligations of the Bangko

Sentral

or

of

other

domestic

credit

institutions

of

recognized solvency;

(3) the credit instruments to which reference is made in

subsection (a) of this section;

(4) the credit instruments to which reference is made in

subsection (b) of this section, for periods which shall not

exceed three hundred sixty (360) days;

(5)

utilized

portions of advances in current account

covered

by

regular

overdraft

agreements

related to

operations included under subsections (a) and (b) of this

section, and certified as to amount and liquidity by the

institution soliciting the advance;

(6) negotiable treasury bills, certificates of indebtedness,

notes

and

other

negotiable

obligations

of

the

Government maturing within three (3) years from the

date of the advance; and

(7) negotiable bonds issued by the Government of the

Philippines by Philippine provincial, city or municipal

governments,

or

by

any

Philippine

Government

instrumentality, and having maturities of not more than

ten (10) years from the date of the advance.

The rediscounts, discounts, loans and advances made in

accordance with the provisions of this section may not be

renewed or extended unless extraordinary circumstances

fully justify such renewal or extension.

Advances made against the collateral named in clauses

(6) and (7) of subsection (d) of this section may not

exceed eighty percent (80%) of the current market value

of the collateral.

C. Special Credit Operation

SECTION

83.

Loans

for

Liquidity

Purposes .

— The

Bangko Sentral may extend loans and advances to

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