MORNBFI Vol. 1 - Planters Development Bank

APP. Q-1008.12.31a. Loans with unlocated collateralfolders and documents including, but notlimited to, title papers, mortgageinstruments and promissory notes;b. Loans to firms not supported byboard resolutions authorizing theborrowings;c. Loans without credit investigationreport;d. Loans not supported by thedocuments required under Subsec.4304Q.1 except:(1) consumer loans, with originalamounts not exceeding P2.0 million:Provided, That these loans are current, andare supported by latest ITR or by BIR Form2316 or payslips for at least three (3)months immediately preceding the dateof loan application, and financialstatements submitted for taxation purposesto the BIR, as may be applicable, at thetime they were granted, renewed,restructured or extended. For this purpose,consumer loans is defined to includehousing loans, loans for purchase of car,household appliance(s), furniture andfixtures, loans for payment of educationaland hospital bills, salary loans and loansfor personal consumption, including creditcard loans.(2) Loans which are exempted fromthe additional documentary requirementsunder Subsec. 4304Q.1e. Loans the repayment of which maybe endangered by economic or marketconditions that in the future may affect theborrower’s ability to meet scheduledrepayments as evidenced by a decliningtrend in operations, illiquidity, or increasingleverage trend in the borrower’s financialstatements;f. Loans to borrowers whoseproperties securing the loan (previouslywell-secured by collaterals) havedeclined in value or with other adverseinformation;g. Loans past due for more than thirty(30) days up to ninety (90) days; andh. Loans previously cited asMiscellaneous Exceptions stilluncorrected in the current BSPexamination.2. Substandard. These are loans orportions thereof which appear to involvea substantial and unreasonable degree ofrisk to the institution because ofunfavorable record or unsatisfactorycharacteristics. There exists in such loansthe possibility of future loss to theinstitution unless given closersupervision. Those classified as“Substandard” must have a well-definedweakness or weaknesses thatjeopardize their liquidation. Suchwell-defined weaknesses may includeadverse trends or development offinancial, managerial, economic orpolitical nature, or a significant weaknessin collateral. Their basic characteristicsare as follows:a. Secured loans(1) Past due and circumstances aresuch that there is an imminent possibilityof foreclosure or acquisition of thecollateral because of failure of all collectionefforts;(2) Past due loans to borrowers whoseproperties securing the loan have declinedin value materially or have been found withdefects as to ownership or other adverseinformation; and(3) Current loans to borrowers whoseAFSs show impaired/negative net worthexcept for start-up firms which should beevaluated on a case-to-case basis.b. Unsecured loans(1) Renewed/extended loans ofborrowers with declining trend inoperations, illiquidity, or increasingleverage trend in the borrower’s financialstatements without at least twenty percent(20%) repayment of the principal beforerenewal or extension; and(2) Current loans to borrowers withunfavorable results of operations for two(2) consecutive years or with impaired/Q RegulationsAppendix Q-10 - Page 2Manual of Regulations for Non-Bank Financial Institutions