The Bangko Sentral ng Pilipinas has opened a rediscounting window for personal loans granted by qualified banks to Overseas Filipino Workers (OFWs) or their immediate families adversely affected by the Middle East crisis.
BSP Governor Rafael B. Buenaventura said this new rediscounting facility should encourage qualified universal, commercial, thrift and rural banks to extend loans to Middle East OFWs or their immediate families. Under the guidelines approved by the Monetary Board, an OFW or his family may borrow up to three months of his basic salary immediately preceding the date of the loan application. Thus, if an OFW receives a monthly salary of $500, the maximum amount he or his family can borrow is the peso equivalent of $1,500.00.
In approving the liquidity facility, the Monetary Board (MB) noted that the continuing tension in the Middle East calls for measures that would ease the plight of OFWs who have contributed much to the economy by way of their foreign exchange remittances. A further escalation of the crisis may result in delays or slowdown in remittances from the region, while an armed conflict could prevent the remittance of OFW earnings due to bank closures and/or lead to the dislocation of OFWs.
As a general policy, personal loans are not eligible for rediscounting. Thus, the MB expanded the list of acceptable loan papers for rediscounting, provided under Circular No. 354 issued October 4, 2002, to include personal loans of Middle East-based OFWs or their immediate families until May 31, 2003, which can be extended if necessary. The countries in the Middle east which host many OFWs are Saudi Arabia, Kuwait, Iran, Iraq, Dubai and Oman.
To qualify for the rediscounting facility, the bank must submit to BSP a copy of the OFW’s employment contract duly validated by the Philippine Overseas Employment Administration (POEA) or the Overseas Workers Welfare Administration (OWWA). Secured and unsecured loans are eligible for rediscounting under this facility up to 80% of the outstanding balance of the OFW’s promissory note. Interest rate is computed on the basis of the 91-day T-bill rates, minus 1%. Maturity is a maximum of 180 days from the release of the proceeds to the applicant bank.