MORNBFI Vol. 1 - Planters Development Bank

APP. Q-4611.12.31MSME exposure:a) The exposure must be to an MSMEas defined under existing BSP regulations;andb) The exposure must be in the formof direct loans, or unavailed portion ofcommitted credit lines and other businessfacilities such as outstanding guaranteesissued and unused letters of credit: Provided,That the credit equivalent amounts thereofshall be determined in accordance with themethodology for off-balance sheet items.Qualified portfolio11. For a bank’s portfolio of MSMEexposures to be considered as qualified, itmust be a highly diversified portfolio, i.e., ithas at least 500 borrowers that aredistributed over a number of industries. Inaddition, all MSME exposures in the qualifiedportfolio must be current exposures. Allnon-current MSME exposures are excludedfrom count and are to be treated as ordinarynon-performing loans. Current MSMEexposures not qualifying under highlydiversified MSME portfolio will be riskweightedbased on external rating and shallbe risk-weighted in the same manner ascorporate exposures.Defaulted Exposures12. A default is considered to haveoccurred in the following cases:a) If a credit obligation is considerednon-performing under existing rules andregulations. For non-performing debtsecurities, they shall be defined as follows:i. For zero-coupon debt securities, anddebt securities with quarterly, semi-annual,or annual coupon payments, they shall beconsidered non-performing when principaland/or coupon payment, as may beapplicable, is unpaid for thirty (30) days ormore after due date; andii. For debt securities with monthlycoupon payments, they shall be considerednon-performing when three (3) or morecoupon payments are in arrears: Provided,however, That when the total amount ofarrearages reaches twenty percent (20%) ofthe total outstanding balance of the debtsecurity, the total outstanding balance of thedebt security shall be considered as nonperforming.b) If a borrower/obligor has sought orhas been placed in bankruptcy, has beenfound insolvent, or has ceased operationsin the case of businesses;c) If the bank sells a credit obligationat a material credit-related loss, i.e.,excluding gains and losses due to interestrate movements. Banks’ board-approvedinternal policies must specifically definewhen a material credit-related loss occurs;andd) If a credit obligation of a borrower/obligor is considered to be in default, allcredit obligations of the borrower/obligorwith the same bank shall also be consideredto be in default.Housing loans13. These include all loans toindividuals for housing purpose, fullysecured by first mortgage on residentialproperty that is or will be occupied by theborrower, which are considered to be indefault in accordance with paragraph 12.Others14. These include the total amounts orportions of all other defaulted exposures,which are not secured by eligible collateralor guarantee as defined in Part III.B.ROPA15. All real and other propertiesacquired and classified as such underexisting regulations.Other Assets16. The standard risk weight for allQ RegulationsAppendix Q-46 - Page 12Manual of Regulations for Non-Bank Financial Institutions