BSP CIRCULAR LETTER COMPUTATION OF PENALTIES UNDER P. D. 717 November 23, 2000
[ BSP CIRCULAR LETTER, November 23, 2000 ]
COMPUTATION OF PENALTIES UNDER P. D. 717
A sample computation of penalties to be imposed on a bank for under-compliance/non-compliance with the requirements of the Agri-Agra Law is illustrated below:
Illustration A:
A bank with total assets of P100 million has a degree of compliance with the agri-agra credit allocation requirement of 45% (i.e. only 45% of the required 25% of its loanable funds was allocated for agri-agra purposes.
Formula:Maximum Daily Fine x Degree of undercompliance x # of days with under-compliance
Where: Actual Ratio of Compliance with: | |
10% Credit Allocation Requirement | 5.00% |
15% Credit Allocation Requirement | 6.25% |
25% Total Agri-Agra Credit Requirement | 11.25% |
Degree of Compliance | 45.00% |
Degree of under-compliance 100% - (11.25% ¸ 25%) | 55.00% |
Maximum Daily Fine for under-compliance(for banks with assets of P100 million and below) | P100.00 |
Assuming the 55% undercompliance remained uncorrected for 15 days from the end of ref. quarter Daily Penalty (P100.00 x 55%) | P55.00 |
Number of days with undercompliance | 15.00 |
Amount of Penalty | P825.00 |
Illustration B:
Bank A with total assets of P100 million has a degree of compliance with the agra credit allocation requirement of 50% and with agri credit of 133%, while Bank B with total assets of P100 million has a degree of compliance with the agra credit of 120% and with agri credit of 86.17%. It is assumed that the rule on offsetting, i. e. excess compliance in the 10% agra credit may be used to offset a deficiency, if any, in the 15% agri-credit, but not vice-versa, was complied.
Bank A | Bank B | |
Where: Actual Ratio of Compliance with: | ||
a. 10% Credit Allocation Requirement | 5% | 12%* |
b. 15% Credit Allocation Requirement | 20%** | 13% |
c. 25% Total Agri-Agra Credit Requirement | 25% | 25% |
Total degree of compliance: Bank A (5%+15%) : | 25% | 80% |
Bank B (12% + 13%): | 25% | 100% |
Total degree of under-compliance | 20% | 0% |
Maximum Daily Fine for under-compliance(for banks with assets of P100 million and below) | P100.00 | P100.00 |
Daily Penalty (P100.00 x total degree of u/compliance) | P20.00 | - |
Number of days with under-compliance | 15 | - |
Amount of Penalty | P300.00 | - |
* Excess compliance is eligible for offsetting
** Excess compliance is not eligible for offsetting
For information/guidance.
Adopted: 23 Nov. 2000
(SGD.) ALBERTO REYES
Deputy Governor