MORNBFI Vol. 1 - Planters Development Bank

§§ 4305Q.3 - 4305Q.408.12.31received by such banks, of P100,000 andover per transaction account, with maturitiescorresponding to the interest periods forwhich such MRRs are being determined.Such rates and the composition of the samplecommercial banks shall be reviewed anddetermined at the beginning of everycalendar semester on the basis of the banks’combined levels of outstanding depositsubstitutes and time deposits as of May 31or November 30, as the case may be.The rate of interest on floating rate loansexisting and outstanding as of 23 December1995 shall continue to be determined onthe basis of the MRRs obtained inaccordance with the provisions of the rulesexisting as of 01 January 1989: Provided,however, That the parties to such existingfloating rate loan agreement are notprecluded from amending or modifying theirloan agreements by adopting a floating rateof interest determined on the basis of TBRor other market-based reference rates.Where the loan agreement provides fora floating interest rate, the interest period,which shall be such period of time for whichthe rate of interest is fixed, shall be suchperiod as may be agreed upon by the parties.§ 4305Q.4 (2008 - 4307Q.7) Accrualof interest earned on loans. QBs areallowed to accrue interest earned on loans,subject to the following guidelines and/orprocedures.a. No accrual of interest income isallowed if a loan has become nonperformingas defined in Sec. 4309Q.Likewise, interest income shall not beaccrued for unmatured loans/receivableswith indications that collectibility thereofhas become doubtful. These indicationsinclude declaration of bankruptcy,insolvency, cessation of operations, or suchother conditions of financial difficulties orinability to meet financial obligations asthey mature. Separate appropriate recordsshall be maintained for these non-accruingunmatured loans.Interest on non-performing loanaccounts shall be taken up as income onlywhen actual payments thereon are received.Interest income on past due loans arisingfrom discount amortization (and not fromthe contractual interest of the accounts) shallbe accrued as provided in PAS 39.b. Interest earned on an extended orrenewed loans may be accrued: Provided,That there is no previously accrued butuncollected interest thereon.Interest income on restructured loans(principal plus capitalized interest thereon)may be accrued: Provided, That these are:(1) In current status; and(2) Fully secured by real estate with loanvalue of up to sixty percent (60%) of theappraised value of the real estate securityand the insured improvements thereon, andsuch other first class collaterals as may bedeemed appropriate by the Monetary Board.c. Accrued interest earned but not yetcollected/received shall not be consideredas profits and/or earnings eligible fordividend declaration and/or profit sharing.d. A contra account to be designatedAllowance for Uncollected Interest onLoans shall be set up in accordance withAppendix 10 if accrued interest receivableon loans or loan installments is stilluncollected after three (3) months from thedate such loans and loan installmentshave matured or have become nonperforming.e. The amount representing Allowancefor Uncollected Interest on Loans may bechargeable against the excess of outstandingvaluation reserves for loans and other riskassets as appearing in the QB’s books overthose recommended by the appropriatedepartment of the SES. The balance thereof,if any, shall be chargeable againstoperations.f. For all purposes, the Allowance forUncollected Interest on Loans shall beconsidered a valuation reserve/allowanceagainst the Accrued Interest Receivableaccount.Manual of Regulations for Non-Bank Financial InstitutionsQ RegulationsPart III - Page 9