Central Bank Regulations of Banking and Non-Banking Financial

Institutions
Common Regulations/General Requirements
Banking institutions are required to observe the following:
1. To grant loans only in the amounts and for periods of time essential for
the effective completion of the operations to be financed. Accordingly,
before granting a loan banks must exercise proper caution to ascertain
that the debtor is capable of fulfilling his commitments to the bank.
2. To terminate the loan and demand immediate repayment of the
obligation, if the bank finds that the funds have been employed,
without its approval, for purposes other than agrees upon with the
bank.
3. Loans against real estate security is not to exceed 70% of the
appraised value of the respective real estate security, plus 70% of the
appraised value of the insured improvements, and the granting of such
loans be made only if title to the real estate is on the mortgagor.
Similarly, loans on the security of chattels is not to exceed 50% of the
appraised value of the security, and such loans will be given if the title
to the chattels be in the mortgagor and free from all encumbrances.
4. The Monetary Board may regulate the amount of credit
accommodations that may be extended, directly or indirectly, by
banking institutions to their directors, officers, or stockholders.
However, the outstanding credit accommodations which a bank may
extend to each of its stockholders owning 2% or more of the
subscribed capital stocks, its directors, or its officers, is limited to an
amount equivalent to the respective outstanding deposits and book
value of the paid-in capital contribution in the bank.
5. No director or officer of any banking institutions either directly or
indirectly, for himself or as the representative or agent of another,
borrow any of the deposits of funds of such banks, nor become a
guarantor, indorser, or surety for loans from such bank, to others, or in
any manner be an obligor for money borrowed from the bank or loaned
by it, except of the bank, excluding the director concerned. The
approval is entererd upon the records of the corporation and a copy of
such entry is transmitted forthwith to the appropriate supervising
department of the Central Bank of the Philippines.
6.

The Monetary Board may fix, by regulation or by order in specific

cases, the amount of reserves for bad debts or doubtful accounts, or
other contingencies. Likewise, writing-off of loans and advances with

an outstanding amount of one thousand pesos or more will require

prior approval of the Monetary Board.