CEBU, Philippines – Capitol yesterday inked a deal with the Development Bank of the Philippines for the province to deposit money with the bank, which will be utilized to finance “soft loans” of local government units under the provincial government.
The province said this “economic enterprise and assistance” is being granted to finance the infrastructure and development projects of its component cities and municipalities.
The funds that would be deposited with DBP would reportedly come from Capitol’s Internal Revenue Allocation and other revenues.
Board Member Wenceslao Gakit, chairman of the committee on budget and appropriations of the Provincial Board, said the province has “ample amount of resources to answer the numerous requests from the different municipalities and component cities to avail on the soft loan program.”
Gakit said the soft loan program has minimal amount of interest compared to loans provided by banks.
Based on the agreement entered into by Capitol and DBP, loan applications need to be screened by the Economic Enterprise Council.
Once a loan application is approved, the Province would avail of a “One-on-One Loan/s” with DBP, which will be secured by its existing deposits with the bank. Upon approval of the “One-on-One Loan/s,” a portion of the Operational Fund Account equivalent to the amount of the loan approved in favor of qualified applicants shall be transferred from its present deposit placement to a non-interest bearing savings account (the “No Interest Account”) as security for the payment of the “One-on-one Loan/s.”
The “No Interest Account” shall then be assigned to DBP and shall be subject to a Deed of Assignment with Hold Out effective until the “One-on-One Loan/s” shall have been fully paid.
All qualified applicants who have been granted loans by the Province shall be made to open a deposit account with DBP to which the IRA and other revenues shall be deposited.
Said deposit account shall be subject to an auto debit arrangement in which DBP shall be authorized to withdraw and apply the assigned deposits and their interest earnings to the payment of qualified applicants’ obligation with the Province that have become due and payable. – Johanna T. Natavio/JMO (THE FREEMAN)