Article 139p. 139

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

banking institutions for a period of not more than seven

(7)

days

without

any

collateral

for

the

purpose

of

providing liquidity to the banking system in times of

need.

D. Emergency Credit Operation

SECTION 84. Emergency Loans and Advances . — In

periods

of

national

and/or

local

emergency

or

of

imminent

financial

panic

which

directly

threaten

monetary and banking stability, the Monetary Board may,

by a vote of at least five (5) of its members, authorize the

Bangko Sentral to grant extraordinary loans or advances

to banking institutions secured by assets as defined

hereunder: Provided , That while such loans or advances

are outstanding, the debtor institution shall not, except

upon prior authorization by the Monetary Board, expand

the total volume of its loans or investments.

The

Monetary

Board

may, at its discretion, likewise

authorize the Bangko Sentral to grant emergency loans

or advances to banking institutions, even during normal

periods,

for

the

purpose

of

assisting

a

bank

in

a

precarious financial condition or under serious financial

pressures brought by unforeseen events, or events which,

though foreseeable, could not be prevented by the bank

concerned: Provided, however, That the Monetary Board

has ascertained that the bank is not insolvent and has the

assets

defined

hereunder

to

secure

the

advances:

Provided, further , That a concurrent vote of at least five (5)

members of the Monetary Board is obtained.

The amount of any emergency loan or advance shall not

exceed the sum of fifty percent (50%) of total deposits

and deposit substitutes of the banking institution and

shall be disbursed in two (2) or more tranches. The

amount of the first tranche shall be limited to twenty-five

percent (25%) of the total deposit and deposit substitutes

of the institution and shall be secured by government

securities to the extent of their applicable loan values and

other unencumbered first class collaterals which the

Monetary

Board

may

approve:

Provided ,

That

if

as

determined by the Monetary Board, the circumstances

surrounding the emergency warrant a loan or advance

greater

than the amount provided hereinabove, the

amount of the first tranche may exceed twenty-five

percent (25%) of the bank's total deposit and deposit

substitutes

if

the

same

is

adequately

secured

by

applicable loan values of government securities and

unencumbered first class collaterals approved by the

Monetary Board, and the principal stockholders of the

institution

furnish

an

acceptable

undertaking

to

indemnify and hold harmless from suit a conservator

whose

appointment

the

Monetary

Board

may

find

necessary at any time.

Prior to the release of the first tranche, the banking

institution

shall

submit

to

the

Bangko

Sentral

a

resolution

of

its

board

of

directors

authorizing

the

Bangko Sentral to evaluate other assets of the banking

institution certified by its external auditor to be good and

available for collateral purposes should the release of the

subsequent tranche be thereafter applied for.

The Monetary Board may, by a vote of at least five (5) of its

members, authorize the release of a subsequent tranche

on

condition

that

the

principal stockholders of the

institution:

(a) furnish an acceptable undertaking to indemnify and

hold

harmless

from

suit

a

conservator

whose

appointment the Monetary Board may find necessary at

any time; and

(b) provide acceptable security which, in the judgment of

the Monetary Board, would be adequate to supplement,

where necessary, the assets tendered by the banking

institution to collateralize the subsequent tranche.

In connection with the exercise of these powers, the

prohibitions in Section 128 of this Act shall not apply

insofar as it refers to acceptance as collateral of shares

and

their

acquisition

as

a

result

of

foreclosure

proceedings,

including

the

exercise

of

voting rights

pertaining to said shares: Provided, however , That should

the Bangko Sentral acquire any of the shares it has

accepted

as

collateral

as

a

result

of

foreclosure

proceedings, the Bangko Sentral shall dispose of said

shares by public bidding within one (1) year from the date

of consolidation of title by the Bangko Sentral .

Whenever a financial institution incurs an overdraft in its

account with the Bangko Sentral , the same shall be

eliminated within the period prescribed in Section 102 of

this Act.

E. Credit Terms

SECTION 85. Interest and Rediscount Rates . — The

Bangko

Sentral

shall

collect

interest

and

other

appropriate charges on all loans and advances it extends,

the

closure,

receivership

or

liquidation

of

the

debtor-institution notwithstanding. This provision shall

apply prospectively.

The Monetary Board shall fix the interest and rediscount

rates to be charged by the Bangko Sentral on its credit

operations in accordance with the character and term of

the operation, but after due consideration has been given

to the credit needs of the market, the composition of the

Bangko Sentral's portfolio, and the general requirements

of the national monetary policy. Interest and rediscount

rates shall be applied to all banks of the same category

uniformly and without discrimination.

SECTION

86.

Endorsement .

—

The

documents

rediscounted,

discounted,

bought

or

accepted

as

collateral by the Bangko Sentral in the course of the

credit operations authorized in this article shall bear the

endorsement of the institution from which they are

received.

SECTION

87.

Repayment

of

Credits . — Documents

rediscounted, discounted or accepted as collateral by the

Bangko Sentral must be withdrawn by the borrowing

institution on the dates of their maturities, or upon

liquidation of the obligations which they represent or to

which they relate whenever said obligations have been

liquidated prior to their dates of maturity.

Banks shall have the right at any time to withdraw any

documents which they have presented to the Bangko

Sentral

as

collateral,

upon

payment

in

full

of

the

corresponding debt to the Bangko Sentral , including

interest charges.

SECTION 88. Other Requirements . — The Monetary

Board may prescribe, within the general powers granted

to

it

under

this

Act,

additional

conditions

which

borrowing institutions must satisfy in order to have

access

to

the

credit

of

the

Bangko Sentral . These

conditions may refer to the rates of interest charged by

the banks, to the purposes for which their loans in

general are destined, and to any other clearly definable

aspect of the credit policy of the bank.

SECTION

89. Provisional Advances to the National

Government . — The Bangko Sentral may make direct

provisional advances with or without interest to the

National Government to finance expenditures authorized

in its annual appropriation: Provided , That said advances

shall be repaid before the end of three (3) months

extendible by another three (3) months as the Monetary

Board

may

allow

following

the

date

the

National

Government received such provisional advances and shall

not, in their aggregate, exceed twenty percent (20%) of

the average annual income of the borrower for the last

three (3) preceding fiscal years.

ARTICLE V Open Market Operations for the

Account of the Bangko Sentral

SECTION 90. Principles of Open Market Operations . —

The open market purchases and sales of securities by the

Bangko Sentral shall be made exclusively in accordance

with its primary objective of achieving price stability.

© Compiled by RGL

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