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Home > Monetary Policy > Monetary Policy Measures > Principal Terms and Conditions > Special Rules for Equity Investments and Asset-Based Lending to Enhance the Fund-Provisioning Measure to Support Strengthening the Foundations for Economic Growth Conducted through the Loan Support Program
June 14, 2011
Revision: March 13, 2012
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January 23, 2019
(Revision to take effect in the near future) [PDF262KB]
With the aim of further enhancing financial institutions' efforts to strengthen the foundations for economic growth through the use of a wider range of financial techniques, the Bank established special rules that supplement the "Principal Terms and Conditions for the Fund-Provisioning Measure to Support Strengthening the Foundations for Economic Growth Conducted through the Loan Support Program" (Policy Board Decision on June 15, 2010, hereinafter referred to as the "Principal Terms and Conditions"). The special rules shall be applied when financial institutions make investments and loans with equity-like features (hereinafter referred to as "equity investments") as well as loans without real estate collateral or guarantees that are deemed appropriate by the Bank (hereinafter referred to as "asset-based lending").
The amount extended to each counterparty for each loan is the amount the counterparty wishes to borrow. Notwithstanding 8. of the Principal Terms and Conditions, such amount shall not exceed the maximum amount of loans prescribed in 3. and the unused value of the total standing pool of eligible collateral pledged to the Bank.
Notwithstanding 10.(2) of the Principal Terms and Conditions, in case the amount calculated by subtracting the amount in 3.(2)(b) from the amount in the 3.(2)(a) falls short of the amount in 3.(2)(c) for loans disbursed pursuant to these special rules on a day specified by the Bank, the counterparty shall repay the amount equivalent to the shortfall, pursuant to the Bank's relevant rules.
The date stipulated in 3.(2) shall be not later than March 31, 2020.
Notwithstanding 12. of the Principal Terms and Conditions, the plan shall be formulated by each counterparty for equity investments or asset-based lending, and satisfy the conditions set forth in Annex 1 to the Principal Terms and Conditions. When applying the special rules, the term "funds received, either borrowed or invested from financial institutions, for a period of no less than one year" in 1 of Annex 1 to the Principal Terms and Conditions shall be deemed to be replaced with "equity investments or asset-based lending."
The special rules shall become effective today and shall be valid through June 30, 2024.