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Wholesale Lending > Funding Commitment Line (FCL) Covered by Domestic Letter of Credit
Funding Commitment Line (FCL) Covered
by Domestic Letter of Credit
HDMF Circular No. 197
OBJECTIVES
- To provide assurance to the developer of the availability
of funds to cover deliveries of completed condominium units/house
and lot packages in accordance with a delivery schedule.
- To provide developers with more credit flexibility in
dealing with banks, supplier and sub-contractors, thereby
reducing project financing costs.
- To serve as an incentive for the developers to finish
the projects on time knowing that funds will not be released
unless the terms and conditions of the LC are followed.
ELIGIBILITY
The Funding Commitment Line covered by Letter of Credit shall
be made available to qualified developers under the Pag-IBIG
Program for the Development of Medium/High Rise Condominium
Building (MHRB) Projects and Pag-IBIG City Program.
AMOUNT/ TERM
A qualified developer may be granted a Funding Commitment
Line with a Letter of Credit up to the maximum amount provided
in the developer’s MOA with HDMF.
The line shall be made available for an initial term of one
(1) or two (2) years, subject to yearly renewal up to a maximum
of two (2) years.
FUNDING COMMITMENT FEE
The developer shall pay a non-refundable Funding Commitment
Fee of 3% for Funding Commitment Line which is valid for 2
years; 2% for Funding Commitment Line which is valid for one
(1) year.
The corresponding Letter of Credit shall automatically be
renewed if the validity of the Funding Commitment Line is
2 years, upon payment of Letter of Credit bank charges by
the developer.
The developer shall pay the corresponding Bank opening/issuance
commission, bank guarantee fee and other related bank charges
upon the opening/renewal of the Letter of Credit.
NEGOTIATION OF LETTER OF CREDIT
- Negotiations/payment on the Domestic Letter of Credit
shall be made by the Bank upon its receipt of Notice of
Payment duly approved by at least 2 HDMF authorized signatories.
- The Notice of Payment shall be issued upon compliance
with all requirements for take out/release of funds under
the pertinent Pag-IBIG guidelines covering the Memorandum
of Agreement with developer.
- Negotiations on the Letter of Credit shall be paid out
of HDMF’s deposits with the bank.
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