Circular No. 089, Series of 1998, on the Quedancor Program for Food and Agricultural Retail Enterprises (FARE) is hereby amended with respect to the following items:

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6.         STATEMENT OF POLICIES

6.1           Purpose of Loan

To augment the working capital and/or expand business operations of retailers.

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6.5       Interest and Service Fee Rates

6.5.1        Sole Guarantee Mode (SGM)

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A guarantee fee of 2.5% per annum shall be paid by LB upon filing of application for guarantee cover.

6.5.2        Guaranteed Co-Financing Mode (GCFM) and Special Window Mode (SWM)

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Interest of loans with a term exceeding one year shall be computed using a discount factor as indicated on the present value table (See attached).

Additionally, Quedancor shall charge a non-refundable service fee of 2.5% on its share of the loan amount for loans with a term not exceeding one year and 2.5% per annum on its share of the outstanding principal for loans whose terms is up to two years. The LB shall have the option to charge its own rate on its share of the loan.

Service fee for the first year shall be deducted from the loan proceeds while interest shall be imputed in the amortization. Payment of service fee for the succeeding year shall be at the start of the anniversary year of the loan.

6.6       Mode and Term of Payment

Loans below P1M shall be payable within a maximum of one (1) year in fixed monthly or quarterly amortizations. Loans from P1M to P3M may be allowed a maximum term of two (2) years and shall be paid in fixed monthly or quarterly amortizations.

For SGM, the mode of payment shall be at the discretion of the bank.

6.7       Loanable Amount

Loan amount shall not exceed P2M for SWM and P3M for SGM and GCFM.

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6.10    Computation of Interests, Surcharges and Penalties

Interest, surcharges and penalties shall be computed as illustrated in Exhibit 1.

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6.10.2      Surcharges of 2% per month shall be collected on the unpaid amortization until the date of actual payment but not yet beyond the maturity date.

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7.         MECHANICS

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7.3       Clientele Accreditation

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The QOO shall conduct a background/credit investigation of the applicant; accomplish the Background and Credit Investigation Report and forward for approval the application together with the required documents to the Regional Assistant Vice-President (RAVP)/Sector Head. Upon approval of the application, the RAVP/Sector Head shall cause the issuance to the borrower of an œAccreditation Certificate and Control Book  (Exhibit 2 *) which shall be valid for a duration of one (1) year. For borrowers with two-year term loans, accreditation shall automatically be renewed and payment of accreditation fee shall be made by the borrower.

7.4       Processing and Release of Loan

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7.4.4 Credit Evaluation Report with recommendation (CER 3 or 4) and the Loan Proposal Memo (LPM) shall be prepared by the QOO and reviewed by RAVP/Sector Head. The loan shall be approved by the authorized Quedancor representative in accordance with Circular No. 090-A on Specifications of Authority.

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7.4.14  The RAVP/Sector Head shall see to it that the original (under SWM) or duplicates/photocopies (under GCFM/SGM) of all loan documents shall be received at POD within three (3) working days from release of loan for safekeeping by the Custodian in accordance with the SOP on Centralized Filing and Safekeeping of loan and collateral documents.

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7.6           Amortization of Loan

7.6.1    Guaranteed Co-Financing/Sole Guarantee Mode

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b.         x                      x          x

For loan amortizations covered by post-dated checks, an acknowledgement receipt shall be issued by the Quedan Operations Officer/loan officer of the lending bank to the borrower. The OR shall be issued upon encashment/crediting of the check proceeds.

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7.6.2    Special Window Mode

For loan amortizations covered by post-dated checks, the person in-charge of safekeeping the check shall issue an acknowledgement receipt and forward the check to the cashier for the issuance of a corresponding OR upon encashment/crediting of the check proceeds.

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8.         GUARANTEE COVERAGE

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8.2           Extent of Guarantee Liability

8.2.1    For SGM

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8.2.2    For GCFM

Quedancor shall answer for defaults of borrowers to the extent of LB ™s share of the outstanding principal plus accrued interest charges based on Quedancor ™s rate up to maturity date or date of demand for full payment, whichever comes first.

10.       EFFECTIVITY

This circular shall amend Circular No. 089, Series of 1998 and shall take effect on March 1, 1999.

Adopted: 19 Feb. 1999

(SGD.) GALO B. GARCHITORENA
President and CEO