MORNBFI Vol. 1 - Planters Development Bank

APP. Q-2409.12.31(9) An excessive volume of past dueor NPLs;(10) Failure to diversify the loanportfolio/asset mix of the institution;(11) Failure to make provision for anadequate reserve for possible loan losses;(12) High incidence of spurious andfraudulent loans due to patently inadequaterisk management systems and proceduresresulting in significant impairment of capital;(13) QB’s niche mostly consists ofborrowers who have impaired or limitedcredit history, or majority of the loans areeither clean/unsecured or backed withminimum collateral values except thoseunderwritten using microfinance technologyconsistent with Sec. X361 and otheracceptable cash flow-based lending systems;and the QB does not have a robust riskmanagement system in place leaving the QBvulnerable to losses;(14) Loan rates are excessively higherthan market rates to compensate the addedor higher risks involved. Excessively higherrates are those characterized by effectiveinterest rates that are fifty percent (50%) overthe prevailing comparable market medianrate for similar loan types, maturities andcollaterals; and(15) Assignment of loans on withoutrecourse basis with real estate propertiesas payment, resulting in total investmentin real estate in excess of the prescribedceiling.n. Permitting officers to engage inlending practices beyond the scope of theirpositions.o. Operating the QB/trust entity withinadequate internal controls.p. Failure to keep accurate andupdated books and records.q. Operating the institution withexcessive volume of out-of-territory loans.r. Excessive volume of non-earningassets.s. Failure to heed warnings andadmonitions of the supervisory andregulatory authorities.t. Continued and flagrant violation ofany law, rule, regulation or written agreementbetween the institution and the BSP.u. Any other action likely to causeinsolvency or substantial dissipation ofassets or earnings of the institution or likelyto seriously weaken its condition orotherwise seriously prejudice the interestof its investors/clients.v. Non-observance of the principlesand the requirements for managing andmonitoring large exposures and credit riskconcentrations under Subsec. 4301Q.6aand b.w. Improper or non-documentation ofrepurchase agreements coveringgovernment securities and commercialpapers and other negotiable and nonnegotiablesecurities or instruments.(As amended by Circular No. 640 dated 16 January 2009)Q RegulationsAppendix Q-24 - Page 2Manual of Regulations for Non-Bank Financial Institutions