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Friday, March 29, 2024

Banks may apply SBL for project financing

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Bangko Sentral ng Pilipinas Governor Benjamin Diokno said Thursday banks may apply the separate Single Borrower’s Limit for project finance exposures, including those to water concessionaires, subject to compliance with certain conditions.

The BSP said that as part of relief measures amid the pandemic, it temporarily raised the SBL to 30 percent from 25 percent until Dec. 31, 2021. The increase covers the SBL for project finance.

“The adoption by the BSP of a separate SBL for project finance aims to mobilize private sector funding toward projects that support the country’s economic recovery efforts and nation building,” Diokno said in an online briefing.

Project finance is a method of funding in which the lender looks primarily to the revenues generated by a single project, both as a source of repayment and as security for the exposure. Project finance entails two sets of contractual arrangements. First is the creation of a legally and economically self-contained entity against which all legal contracts are written. The second is the establishment of a set of contracts which dictate the distribution of risks and returns.

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