MORNBFI Vol. 1 - Planters Development Bank

§§ 4322Q.1 - 4322Q.208.12.31(1) When the loan is current andperforming (i.e., with updated principal andinterest payments) on the date ofrestructuring, in which case, the loan shallretain its performing 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:Provided, That a restructured loan, with orwithout capitalized interest, must be yieldinga rate of interest equal to or greater than theQB’s average cost of funds at the date ofrestructuring, otherwise, it shall be considerednon-performing.The restoration to a performing loanshall only be effective after a satisfactorytrack record of payments of the requiredamortizations of principal and/or interesthas been established.For this purpose, a satisfactory trackrecord of payments of principal and/orinterest shall mean three (3) consecutivepayments of the required amortizations ofprincipal and/or interest have been made.However, in the case of a restructured loanwith capitalized interest but not fullysecured by real estate with loan value of upto sixty percent (60%) of the appraised valueof the real estate security and the insuredimprovements thereon or other first classcollaterals, six (6) consecutive payments ofthe required amortizations of principal and/or interest must have been made.A restructured loan which has beenrestored to a performing loan status shall beimmediately considered non-performing incase of default of any principal or interestpayment in accordance with Sec. 4306Q.§ 4322Q.2 (2008 - 4351Q.2) Proceduralrequirementsa. A loan may be restructured subjectto the approval of the QB’s board ofdirectors in a resolution which shallembody, among other things:(1) the basis of or justification for theapproval;(2) determination of the borrower’scapacity to pay, such as viability of thebusiness; and(3) the nature and extent of protectionof the QB’s exposure.The authority to approve therestructuring of loans may be delegated bythe QB’s board of directors to a committeeor officer(s): Provided, That there are boardprescribedguidelines specifically onrestructuring of loans: Provided, further, Thatsaid guidelines shall be submitted to theappropriate department of the SES withinthirty (30) days following the date ofapproval thereof. However, loans previouslyapproved by the executive committee as wellas those granted to DOSRI shall be subjectto approval by the board as provided underexisting rules and regulations. Loansrestructured other than those approved bythe board shall be reported to it forconfirmation.b. A second restructuring of a loanshall be allowed only if there are reasonablejustifications: Provided that it shall beconsidered a non-performing loan andclassified, at least, “Substandard”. Therestoration to a performing loan statusand/or the upgrading of loan classification,e.g., from “Substandard” to “LoansEspecially Mentioned”, if circumstanceswarrant an upgrading in accordance withthe criteria under Appendix Q-10, shallonly be allowed after a satisfactory trackrecord of at least six (6) consecutivepayments of the required amortization ofprincipal and/or interest has beenestablished.c. In the restructuring process, the QBshall encourage the borrower to improve thequality of the loan either by strengtheningfinancial capacity or providing additionalcollateral.The real estate security and/or other firstclass collaterals offered shall be appraisedat the time of restructuring to ensure thatManual of Regulations for Non-Bank Financial InstitutionsQ RegulationsPart III - Page 21