NON-PERFORMING LOANS; LOANS RECEIVABLE PAYABLE IN INSTALLMENT

The Monetary Board, in its Resolution No. 707 dated May 5, 2000,
approved the following amendments to Circular No. 202 dated May 27, 1999
and Circular No. 143 dated October 1, 1997:

SECTION 1 .       Section 1 of Circular No. 202 is hereby amended to read as follows:

“SECTION 1.     Non-performing loans — Definition.

Non-performing loans shall, as a general rule, refer to
loan accounts whose principal and/or interest is unpaid for thirty (30)
days or more after due date or after they have become past due in
accordance with existing rules and regulations. This shall apply to
loans payable in lump sum and loans payable in quarterly, semi-annual or
annual installments, in which case, the total outstanding balance
thereof shall be considered non-performing.

In the case of loans payable in monthly installments, the total
outstanding balance thereof shall be considered non-performing when
three (3) or more installments are in arrears.

In the case of loans payable in daily, weekly or semi-monthly
installments, the total outstanding balance thereof shall be considered
non-performing at the same time that they become past due in accordance
with the criteria under Circular No. 143 dated October 1, 1997, i.e.,
the entire outstanding balance of the loan/receivable shall be
considered as past due when the total amount of arrearages reaches ten
percent (10%) of the total loan receivable balance.

Restructured loans shall be considered non-performing in accordance with existing rules and regulations.

All items in litigation as defined in the Manual of Accounts for Banks shall be considered non-performing loans.”

SECTION 2.        Section 1 of Circular No. 143 is hereby amended to read as follows:

Section 1.     Item e of Subsec. X306.1 of the Manual of Regulations for Banks is hereby amended to read as follows:

“Loans/receivables payable in installments — the total
outstanding balance thereof shall be considered past due in accordance
with the following schedule:

Mode of Payment	Minimum Number of Installments in Arrears
Monthly	3
Quarterly	1
Semestrally	1
Annually	1

Provided, however, that when the total amount of arrearages
reaches twenty per cent (20%) of the total outstanding balance of the
loan/receivable, the total outstanding balance of the loan/receivable
shall be considered as past due, regardless of the number of
installments in arrears: Provided further, that for modes of payments
other than those listed above (e.g., daily, weekly or semi-monthly), the
entire outstanding balance of the loan/receivable shall be considered
as past due when the total amount of arrearages reaches ten per cent
(10%) of the total loan receivable balance.

For this purpose, the term ‘installments’ shall refer to principal
and/or interest amortizations that are due on several dates as
indicated/specified in the loan documents.”

This Circular shall take effect immediately.

Adopted: 26 June 2000

(SGD.) AMANDO M. TETANGCO, JR.
Officer-in-Charge