OFFICE OF

THE GOVERNOR
CIRCULAR NO. _____
Series of 2015
Subject: Risk Management

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A. Mabini St., Malate 1004 Manila, Philippines (632) 524-7011 www.bsp.gov.ph bspmail@bsp.gov.ph

Guidelines
on
Salary-Based
General-Purpose
Consumption Loans The Monetary Board, in its Resolution
No._____ dated __________ 2015, approved the amendments:
Section 1. Section X321 of the MORB and Section 4337S of
the MORNBFI including their respective subsections shall
now read as: X321/4337S
Policies on Salary-Based
General-Purpose Consumption loans."Section X321/4337S
Salary Loans. Statement of Policy. The Bangko Sentral shall
promote the sustainable development of consumer lending
such as salary loans under conditions of fair and recognizes
the helpful role of salary-based, consumer lending schemes
in allowing an individual borrower to manage his/her cash
flows provided these are granted under sound credit
standards and fair consumer practices. The BSP likewise
encourages competition and transparency to promote
efficient and innovative delivery of financial services and fair
dealing
with
customers.Subsection
X321.1/4337.1S.1
Definition
of
termsSalary-Based
General-Purpose
Consumption Loans Salary Loans.
Refer to uUnsecured
loans for a broad range of consumption purposes, granted to
individuals mainly on the basis of regular salary, pension or
other fixed compensation, where repayment would come
from such future remunerations cash flows, either through
salary deductions, debits from the borrowers deposit
account, mobile payments, pay-through collections, overthe-counter
payments
or
other
type
of
payment
arrangement
agreed
upon
by
the
borrower
and
lender.Subsection X321.3/4337.3 Credit UnderwritingCredit
underwriting policies of the financial institutions (FIs) shall
be consistent with sound credit processes prescribed under
BSP regulations and best practices and shall not be unduly
reliant on mere formula such as those automatically granted
based on certain multiples of monthly salary or other
regular compensation;Individual borrowing capacity should
be prudently assessed considering reasonable estimates of
total personal and household indebtedness as well as
disposable income available for family and personal needs
after considering debt servicing;Original loan term shall be
ideally short-term but may have longer maturity in
meritorious cases provided that in no case shall maturity
exceed 5 years; andNo loan renewal shall be granted
without re-assessing borrowing capacity and establishing
continuing creditworthiness. X321.4/4337S.4
Consumer
Protection - FIs are required to strictly adhere to BSP
regulations on Financial Consumer Protection as prescribed
under the following:Part Ten entitled Consumer Protection of
the Manual of Regulations for Banks;Part Ten of the
Regulations Governing Non-Bank Financial Institutions
Performing Quasi-Banking Functions (Q Regulations);

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andPart 4 of the Regulations Governing Non-Stock Savings

and Loan Associations (S Regulations).X321.5/4337S.5
Sanctions. - The BSP reserves the right to impose sanctions
on an FI and/or its Board, directors and officers,
proportionate to the gravity/seriousness of the offense in
cases of persistent non-observance of the provisions
contained herein.Section 2. Transitory Provision. This
Circular shall apply to all Salary-Based General-Purpose
Loans as defined herein including those outstanding prior to
effectivity of the Circular.FIs shall be given one (1) year from
the effectivity of this Circular to adopt/amend their policies,
procedures and credit risk strategy on Salary-Based
General-Purpose Consumption loans to comply with the
provisions contained herein.Within 90 days from effectivity, all
covered FIs shall conduct an inventory of all their outstanding loans
that meet the definition of a Salary-Based General-Purpose
Consumption loan as defined herein and report to BSP all
outstanding loans that do not meet the minimum credit
underwriting guidelines.
Section 3. Effectivity. This Circular shall take effect fifteen (15)
calendar days following its publication either in the Official Gazette
or in a newspaper of general circulation.

FOR
THE
BOARD:

MONETARY

AMANDO M. TETANGCO,
JR.
Governor
__________ 2015

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