BSP okays hike in DBP's single borrower's limit

The Bangko Sentral ng Pilipinas (BSP) has reportedly approved in principle the request of the Development Bank of the Philippines for an increase in its single borrower's limit (SBL) for wholesale lending.

DBP president Remedios Macalingcag said they made the request because of the higher borrowing requirement of merged financial institutions such as that of Equitable-PCIBank and BPI-FEBTC.

DBP's SBL for wholesale lending, Macalingcag said, is 25 percent of capital accounts. DBP's capital at present stands at P14.5 billion.

To be able to lend to the bigger institutions, DBP has to have a higher lending ceiling. It has requested that its SBL be increased to 35 percent.

Macalingcag said the BSP's approval still has to be confirmed depending on the results of a study to determine that no legal problem will result from the higher lending ceiling.

DBP is primarily a wholesale lending bank for development financing.

It lends to participating financial institutions which in turn lend to direct borrowers.

The DBP usually gets its funds from official sources such as the World Bank, the Asian Development Bank and the Japanese Banking for International Cooperation (JBIC). For this year, a total of P21.227 billion coming from various official sources is available for relending by DBP.

These funds include about P11.814 billion from the Japanese Overseas Economic Cooperation Fund for the Industrial and Support Services Expansion Program Phase II and another P7.876 billion also from the OECF for the Environmental Infrastructure Support Credit Program phase II.

The DBP also engages in some retail lending and lends to local government units. As of December 1999, the DBP has approved loans to LGUs totalling P6 billion for the construction of public markets, slaughterhouse, roads, hospitals and schools.

The bank also earmarked P9.5 billion in credit facilities and technical assistance to finance environmental management projects for pollution prevention, waste minimization and energy conservation. -- Marianne Go