BSP eases asset cover norms for foreign currency loans

THE central bank said the rules easing the standards for asset cover on foreign currency liabilities will allow a two-week compliance period to bring coverage back to 100%

In a circular issued on May 6 by Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno, the central bank said lenders will be subject to a “rolling two-week compliance period” to make good any deficiency in asset cover.

Banks are required to maintain 100% asset cover at all times on expanded/foreign currency deposit units (E/FCDUs). The two-week compliance period gives banks more flexibility to manage their foreign currency exposure.

The BSP said banks will be required to report on their compliance with the FCDU/EFCDU asset cover requirements, the data for which should be available for on-site examination or off-site verification when required. — Luz Wendy T. Noble