The Monetary Board has relaxed the single borrowers limit (SBL) on banks buying trade receivables from small and medium scale enterprises (SMEs).
In a circular which will take effect next week, the BSP's policy-making body said that the banks would be entitled to an additional 10 per cent exposure to trade receivables, on top of the current SBL of 25 per cent of the bank's net worth.
This is on condition, however, that the SME's receivables are due from companies with credit ratings of at least AA or equivalent from a BSP-recognized rating agency.
The MB imposes an SBL to prevent banks from exposing themselves to just one industry or borrower.
The banks said that the trade receivables of SMEs, which had become past due or rolled over, shall be computed as an additional loan by the bank to the SMEs.
In an earlier ruling the BSP said it would exempt from the SBL the exposure arising from banks' purchases of SME receivables from top corporations.
