Tuesday, May 20, 2008

Land Bank extends support to the OFWs

In a move to help the Overseas Filipino Workers (OFWs) to remit money back home more conveniently, the Land Bank of the Philippines is now offering a high yield special deposit facility with an annual yield of 7% that would help the OFWs and their families to make more savings which in turn would help the OFWs once they come back to their country. In a statement issued by Land Bank President Gilda Pico said that the bank aims to issue around P2 billion worth of 5.5 year long term negotiable certificates of deposits, or LTNCDs and will be offered until May 16.

These LTNCDs will be offered in multiples of P20,000 but the maximum investment of P250,000 was set to ensure that the OFWs and their families stand to benefit more. This in a way is a win win situation for the OFWs who would be spending P13,699 to buy one unit of LTNCD and gain P20,000 after five and a half years. The LNTCD is indeed going to benefit the OFWs because not only is it free of the 20% withhold tax on interest on regular deposits, it also carries higher yields compared to the regular time deposits because it is subject to a lower reserve requirement of 2.0% under central bank regulations. Investors will be required to hold the security until maturity, unlike in time deposits, which can be pre terminated. Since, the LNTCD is negotiable, it can be used as collateral for bank loans or sold to another investor. Land Bank requires applicants to present documents to prove that they are OFWs or related to OFWs.

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