The law (Section 36, General Banking Law) does not however absolutely prohibit DOSRI borrowings, but subjects them to limits and to regulatory processes.
Regarding the limits, DOSRI loans cannot exceed the capital contribution and deposit of the borrowing party to make sure that he does not benefit from the funds coming from the public, although non-risk exposures and loans under a bank's fringe benefits program can be excluded from the ceilings under regulations promulgated by the Monetary Board.
The answer is simple - the legal requirement cannot be met and, thus, such DOSRI loan should not be granted by the bank.
Under Section 36 of the General Banking Law of 2000, the BSP is authorized to implement restrictive DOSRI rules.
Trust corporations have a separate SBL and DOSRI ceilings - these are spin offs of banks' existing trust units.
The AUM of the trust corporation will not form part of the parent bank and/or quasi-bank's SBL and DOSRI ceilings while the purchases by the trust corporation in behalf of its clients of securities or instruments issued by its parent bank and/or quasi bank will not form part of the trust corporation's SBL and DOSRI caps.