Effective Interest Rate Calculation Models for all Types of Loans
MEMORANDUM NO. M-2011-040
To: All Banks
Subject: Effective Interest Rate Calculation Models for all Types of Loans
Relative to the implementation of Circular No. 730 dated 20 July 2011 on updated rules in implementing the Truth in Lending Act to enhance loan transaction transparency, Effective Interest Rate (EIR) calculation models illustrative of common loan features are presented herewith (Annexes A-E) for guidance. It is understood, however, that an EIR calculation model, founded on established principles of discounted cash flow analysis, for a loan should be based on the actual features thereof. A bank shall be solely responsible for the propriety and accuracy of its EIR calculation model. However, for purposes of determining compliance with Circular No. 730, the BSP's determination of the reasonableness and accuracy of an EIR calculation model prevails.
NESTOR A. ESPENILLA, JR. Deputy Governor
More in BSP Memoranda
- Adherence with the Know Your Pawner Policy and Valid Identification Document (ID) requirements in any pawnshop transactions(BSP Memoranda No. M-2013-020)
- Guidance on Managing Ransomware and Other Malware Attacks(BSP Memoranda No. M-2017-018)
- Borrowings of BSP Personnel from Any Institution Supervised by the Bangko Sentral ng Pilipinas(BSP Memoranda No. M-2009-025)
- Guidelines on the Electronic Submission of List of Members of the Board of Directors, Trustees, and Officers (LDTO)(BSP Memoranda No. M-2021-010)
- Sampling Methodology in the Verification of Unfit Low-Denominated Banknotes(BSP Memoranda No. M-2021-041)
- Acceptance of all formats of the National ID, including the Digital National ID, and Use of the National ID Authentication Services(BSP Memoranda No. M-2024-026)
- BSP Foreign Currency Banknote Purchases from Banks(BSP Memoranda No. M-2018-034)
- MB Resolution No. 1686 dated 26 November 2009 - Placement of the Balayan Bay Rural Bank (Batangas), Inc. Under Receivership(BSP Memoranda No. M-2009-047)
Want an analysis of this document?
Ask ASG Legal AI to summarize it, compare it with other rulings, or explain how it applies to your situation — it researches from this same library.