MORNBFI Vol. 1 - Planters Development Bank

§§ 4201Q - 4235Q.308.12.31PART TWODEPOSIT SUBSTITUTES AND BORROWING OPERATIONSA. - D. (RESERVED)Secs. 4201Q - 4234Q (Reserved)E. DEPOSIT SUBSTITUTE OPERATIONSSection 4235Q (2008 - 4211Q) DepositSubstitute Instruments. Only the followingtypes of instruments may be issued by QBsas evidence of deposit substitute liabilities:a. Promissory notes;b. Repurchase agreements (Repos); andc. Certificates of assignment/participation with recourse.§ 4235Q.1 (2008 - 4211Q.1) Prohibitionagainst use of certain instruments as depositsubstitutes. Acceptances, bills of exchange andtrust certificates shall not be used as evidence ofdeposit substitute liabilities. This prohibitionshall not apply to the acceptance or negotiationof bills of exchange in connection with tradetransactions, or to the issuance of trustcertificates creating trust relationship.§ 4235Q.2 (2008 - 4211Q.2) Negotiationsof promissory notes. Negotiable promissorynotes acquired by QBs shall not benegotiated by mere indorsement and/or delivery,if they do not conform with the minimumfeatures prescribed under Subsec. 4235Q.3. Ifthese notes do not contain the features in saidSubsection, their negotiation shall be coveredby any of the appropriate deposit substituteinstruments mentioned in Sec. 4235Q.§ 4235Q.3 (2008 - 4211Q.3) Minimumfeatures. Deposit substitute instrumentsissued by QBs shall have the followingminimum features.a. The present value and maturityvalue and/or the principal amount andinterest rate and such other information asmay be necessary to enable the parties todetermine the cost or yield of the borrowingor placement shall be specified.b. The date of issuance shall beindicated at the upper right corner of theinstrument, and directly below which shallbe the maturity period or the word“demand”, if it is a demand instrument.c. The payee may be identified by histrust account/deposit account number in bothnegotiable and non-negotiable instruments.d. Securities which are the subject ofa repo or a certificate of assignment/participation with recourse, shall beparticularly described on the face of saidinstruments or on a separate instrumentattached and specifically referred to thereinand made an integral part thereof as to themaker, value, maturity, serial number, andsuch other particulars as shall clearlyidentify the securities.e. The instrument shall provide for thepayment of liquidated damages, in additionto stipulated interest, in case of default bythe maker/issuer, as well as attorney’s feesand cost of collection in case of suit.f. A conspicuous notice at the lowercenter margin of the face of the instrument thatthe transaction is not insured by the PDIC.g. The corporate name of the issuershall be printed at the upper center marginof the instrument and directly below whichshall be a designation of the instrument,such as, “Promissory Note” or “Repo”.h. The words “duly authorized officer”shall be placed directly below the signatureof the person signing for the maker/issuer.Manual of Regulations for Non-Bank Financial InstitutionsQ RegulationsPart II - Page 1