PDIC Regulatory Issuance No. 2017-01: Revised Rules and Regulations on Regular Assessment of Banks

BSP Memorandum No. 2017-019: BSP Supplemental Guidelines on BSP EMV Migration Requirement

BSP Circular Letter 2017-033: Consolidation Program for Rural Banks

BSP Circular 955: Amendment to Appendix 39 of the Manual of Regulations for Banks (MORB)

BSP Circular 957: Examination and Records of BSP-Supervised Financial Institutions

BSP Advances Sunset Period for TBs, RBs and CBs

The Bangko Sentral ng Pilipinas (BSP) announced today that the Monetary Board has approved the termination of the sunset provision in favor of thrift banks (TBs), rural banks (RBs) and cooperative banks (CBs), resulting in a unified rediscounting window for all types of banks.

In 2013, reforms were made to bring the BSP Peso rediscounting policies in line with its lender-of-last-resort function through Circular No. 806 dated 15 August 2013. The Circular established, for a prescribed period, two separate rediscounting windows (RWs), namely: RW I for universal and commercial banks, and RW II for TBs, RBs and CBs. TBs were given a sunset period of five years or until 15 November 2018 while RBs and CBs were given 10 years or until 15 November 2023 to access RW II at the then existing terms. These banks were expected to use the transition period to improve their deposit mobilization capacities and increase the utilization of other funding sources, thus reducing their dependence on BSP funding over time.

The Monetary Board noted that based on the statistical data of TBs, RBs and CBs, these banks are no longer dependent on BSP funds, warranting the shortening of the sunset period. This was validated by the results of a conducted survey of rediscounting banks and through consultative meetings with banking groups.

Following the termination of the sunset provision, all banks shall access a unified rediscounting window which shall adopt the terms under RW I. Accordingly, this will have the following changes affecting TBs, RBs and CBs:

1) Adjustment of rediscount rates as follows:

sunset provision

1 O/N RRP and O/N lending rates are 3.0 percent and 3.5 percent, respectively.

and

2) Shortening of maximum loan maturity from 360 days to 180 days.

The BSP will issue a Circular implementing the amendments to the rediscounting policies which shall take effect 15 calendar days following its publication either in the Official Gazette or in a newspaper of general circulation.

Source: http://www.bsp.gov.ph/publications/media.asp?id=4381

2017 RBAP National Convention – Keynote Speech of Senator Juan Edgardo “Sonny” M. Angara

64th RBAP National Convention and General Membership Meeting
Cordillera Convention Hall, Baguio Country Club
May 30, 2017

Keynote Speech
by Sen. Juan Edgardo “Sonny” M. Angara

Magandang umaga po sa ating lahat. Thank you for inviting me here all the way from Baguio. I wish I could stay as long as you but I just arrived and I have to be in my flight after this speech because, well, we all know there are many important things happening around in our country.

But give me some time to share my thoughts on what is happening in banking sectors.

So, by many indicators the Philippine financial sector appears to be still performing well and enjoying (_) global confidence. Last year, consolidated bank loans were up, as were the assets of the banking industry. Deposits were at an all-time high of P10.1 trillion. Credit rating agencies maintained their positive outlook for Philippine banking, as several foreign banks expressed interest in setting up shop in the country. As outgoing BSP governor Amando Tetangco Jr. pointed out, not only did Philippine banking survive a volatile 2016, we thrived throughout of it.

Such high performance has been true for a number of years. Two years ago, we pointed out that ours was the only banking sector out of 69 others rated positively by the end of 2014. We were performing well then. We seem to be still performing well now.

But while things are looking up, millions are still hungry, sick, jobless and hopeless. While the gap between the rich and the poor seemingly continues to widen.

Our economy for sure remains among the fastest growing in the region. We’ve maintained more than 70 quarters of economic growth since 1998 which is an impressive thing, but I think just as probably, this is not the first time that you’re hearing this but it appears that many are still excluded from this growth – still excluded. And we have a few at the top, we have millions at the bottom and we still seem to lack that strong middle class which many countries have succeeded in building up.

History has shown that this middle class is the most important foundation, not just for promoting economic activity, but also for building a robust and a stable democracy. Getting more people into the class that philosopher Aristotle once described as a moderating force should be one of our goals as a society.

The American poet Walt Whitman once wrote that the greatest country is not that which has the most capitalists, the most monopolists, the most immense grabbings or fortunes with its sad, sad soil of extreme degrading damning poverty, but it is a land where wealth does not show such contrasts high and low, [and] where all men have enough for themselves.

We heard this during the recent Asean business summit. We heard it during the Asean summit when we had all the leaders of the various countries: Indonesia, Malaysia, Singapore, etc.

I’m encouraged by your association’s effort alongside the BSP to build a more inclusive society. We’ve also worked as a public servant, to build a strong middle class, where all Filipinos ultimately had enough for themselves and their families.

For the past decade or so, we’ve been trying to promote reforms in human capital development as well as reforms in taxation more recently. We’ve always been focused on health and education ensuring that every Filipino is healthy and skilled enough to earn a decent living and to lift themselves up from poverty.

From making kindergarten and early-years education universal, we’re now working on making tertiary education available to all. The Senate very recently passed the Free College Education Law or bill and that’s a law in few weeks. Surely, the president will sign it into law. So, from mandating universal healthcare to expanding Philhealth coverage, we’re now trying to get basic medicines and even dialysis treatment to the communities who need them the most.

Building a middle class is also why we’re working to address some of the deficiencies in our tax code that have gone unanswered for almost two decades. Our current tax code was enacted in 1997, , the CTRP or Comprehensive Tax Reform Program during the Ramos administration. In the intervening years since then, we have failed to keep our tax rates updated with the times or indexed to inflation.
This has pushed people like entry-level professionals, nurses, teachers, call center agents into higher brackets, paying high taxes which they shouldn’t be paying. And while these at the very top are more likely to have a means to reduce or those at the very top are more likely to have the means to reduce their tax due, this was how our antiquated tax code helped widen the gap between the rich and the poor.

So, with the changes we seek to hopefully enact no longer will those trying to move up be overburdened by heavy taxes while those at the top, enjoying a free pass.

We’re fortunate to work on several banking sector reforms focusing on getting people access to the financial services that do boost their chances of moving up economically.

During the 14th and 15th congresses, we enacted the pre-need code to save what at the time was a scandal-ridden Pre-Need industry. We passed a stronger insurance code, and we modernized our insolvency laws. We wanted to make the banking sector more accessible to have lower transaction cost and to allow for more people to acquire credit with less collateral. Hence, we passed the Credit Information Systems Act which mandates that all financial institutions be connected to a single database where credit information of clients is shared. This was 2003. So we’re happy that finally, in 2017, the Credit information Corporation expects this database to finally come online although this is more than a decade after the original law was enacted.

We also laid down a framework for banks and other financial institutions to become administrators of the PERA or the Personal Equity and Retirement Account, a Philippine version of 401k retirement plans offered in the United States as well as in other developed countries.

Thanks to the efforts of the BSP, SEC and other regulators. Finally, the PERA system is in place and for now, we have some universal banks who are already accredited as PERA administrators.

PERA hopes to give our Philippine consumers, consuming public our better selection because any financial product can be included as PERA account and OFW fund. Before we’ve been saying that there is a need to channel these funds rather than just be used to spend in malls or buying appliances. PERA is one such way to attract such funds providing tax (_) in the process.

Hopefully, we can expect similar developments with the role of the real estate investment trust or the REIT. These laws were passed almost a decade ago but it shows how hard it is for our system to absorb some of these changes.

None of these changes will stick, however if our people are not financially literate. And that’s why we make sure to include in the Youth Entrepreneurship Act that financial literacy be incorporated in curriculums across our basic education system.

We even enacted the law that designates the second of November every year as Economic and Financial Literacy Week where government agencies and local government units can conduct information-drives and training modules on financial literacy. How many times have we seen our people lured by (_) and blinded by risky ventures in the past? Investment scams. Paulit-ulit ho. Every year has its own version and hopefully with greater financial literacy, could have less public scam by all of these unscrupulous schemes.

I’m happy to note that the forefront of providing financial services to those at the bottom working to move up. Among the different bank categories, rural banks are perhaps among the most compliant in terms of mandatory lending. For that I congratulate you.

Where the Magna Carta for Small Enterprises mandates banks to set aside 10 percent of their loan portfolios for MSMEs, RBAP members devoted roughly 33 percent—or one-third of your total available credit.

Where the Agri-Agra Law (RA 10000) requires that up to 25 percent of loans should be for agriculture, fisheries and agrarian reform beneficiaries, RBAP members gave nearly 50 percent (46.53%= 29.5% to agriculture; 17.03% to agrarian reform). Palakpakan naman po ninyo ang inyong mga sarili.

For various reasons, the banking sector in general finds it difficult to serve those at the bottom—the majority of Filipinos whom some consider unbankable, and thus too risky to serve.

That’s clearly not the case for all 473 members of the RBAP. You may account for nearly two percent (1.6%) of the entire banking industry’s assets. But clearly, by your credit performance alone, you have demonstrated your commitment to helping the millions at the bottom for the financial or economic period. You can truly be proud of the example you are setting for the rest of your industry. And I have breakfast with some of your officers and they are trying to convince me not only to penalize those who do not comply but to also reward those who comply with the Agri-Agra Law and other mandated or legislated commitments. So, we are looking at that. I am honored to be among you here who are working for financial opportunities to be made available for all Filipinos to move up in our society.

Having access to enough education, health, take-home pay, and financial opportunities, ultimately help ensure that people are included and given the chance to participate and engage in society.

As economic forces have brought prosperity to societies in the last decade to various countries particularly in Asia, have been lifted out of poverty. At the same time though, there are forces and dark clouds that appear in the horizon.

Terrorism and extremism have emerged as threats to our way of life. We are hopeful that our armed forces will be able to put a stop to the violence happening in Mindanao at the soonest time possible time , effectively neutralizing any need for Martial Law to continue. That is a more urgent concern for the moment. But really the surest way for Martial Law to never happen again is by organizing our communities to be as inclusive as possible and by working so that every person has enough, materially, and spiritually. That should be our long-term, abiding concern.

Indeed, much has already been achieved, but clearly, much more needs to be accomplished. All the more is it imperative that we remain vigilant and incessant in pushing the sector forward.

I understand that RBAP has constituted a technical working committee to study the Rural Banking Act of 1992 as well as other related laws. I’ve also been told that there are talks about setting up shared services to boost the IT capabilities of small rural bankers, and hopefully enable them to offer their clients e-banking services. Again, I commend you for taking pro-active measures to provide better services for our countrymen.

To be ever vigilant requires us to be a little unsatisfied, even if we’ve accomplished much. Thomas Edison once said, “Restlessness is discontent and discontent is the first necessity of progress. Show me a thoroughly satisfied man and I will show you a failure.” I don’t think any of us want to fail in what we are doing.

There is still much to be unsatisfied with, especially when it comes to financial inclusion. Millions of Filipinos are still unbanked. Only 14 percent of Filipino households maintain a deposit account (as compared to 86 percent without one). Two out of 10 Filipinos have never even saved one centavo in their whole life.

We still hear of cases where gaining access to credit is the exception rather than the rule for small and medium enterprises. This partially explains why this sector accounted for only 35 percent of GDP in 2014, despite representing more than 99 percent of all businesses in the Philippines and employing up to 65 percent of the labor force.

The same rings true for agriculture, the sector that as of January 2017 employed 1 out of every 5 able-bodied Filipinos. A recent study by the Agricultural Credit Policy Council (ACPC) estimated that in 2014, the unmet credit demand for priority agricultural products was as high as P364 billion in 2014.

Adam Smith, the father of capitalism, wrote in the book The Wealth of Nations, that a good financial system can increase the industry of the country, “…not by augmenting the capital of the country, but by rendering a greater part of that capital active and productive. He continues, by writing and saying, “The judicious operations of banking enable [a dealer, merchant or bank client] to convert this dead stock into active and productive stock; into materials to work upon, into tools to work with, and into provisions and subsistence to work for; into stock which produces something both to himself and to his country…”

In short, the financial system should not be where wealth is just hidden away, but where it is put to better use for the rest of the country. The financial system shouldn’t just be a collection of vaults or security boxes, but a clearinghouse of opportunities.

Nagtatagumpay po ang inyong sektor kapag nakakahain kayo ng ayudang pinansiyal sa bawat Pilipinong nangangailangan at karapat-dapat na makatanggap ng pondo. Sapat dapat ang kanilang “access to credit.” Sapat dapat ang pagkakataon para sa bawat Pilipino.

Our greatest source of discontent, but also our most powerful motivation, should be the fact that even though ours is among the fastest-growing countries in the world, we are still also among the world’s most unequal societies – with the very few hoarding so much, while the impoverished millions barely even surviving.

But then, there are stories like those of Lydia Malot, a nata de coco manufacturer. She’s a former teacher, and Lydia was able to secure some orders from Dole Philippines, borrowing P4,000 from a small microfinance organization in 2006 to expand her productions. Just recently, she started exporting nata de coco to Korea.

There’s also an inspiration story of Ester Sheila Vitto, who, with her husband, started a business making sandals and slippers out of old tires. Her initial capital was P10,000. In 2007, she took out a P6,000 loan from CARD Bank. By 2015, her average annual sales were P2.1 million, with average annual profit at around P1 million.

These individuals are among the winners during the recent Citi Microentrepreneurship Awards (CMA). They prove that people can overcome poverty, especially with an inclusive and nurturing financial system. Imagine if we are able to replicate more of these stories—in more of the poor Philippine towns, and poor Philippine communities, I’m sure rural banks will play a significant role in multiplying these efforts.

Noted economist Jeffrey Sachs once said: “At the most basic level, the key to ending extreme poverty is to enable the poorest of the poor to get their foot in the ladder of development. The ladder of development hovers overhead, and the poorest of the poor are stuck beneath it. They lack the minimum amount of capital necessary to get a foothold, and therefore need a boost up to the first rung. “Our financial system can definitely become that “boost-up to the first rung” for our people.

Umaasa po ang mga kababayan natin sa inyo, mga rural banker at tiwala naman po ako na you will rise up the challenges in the future.

Maraming salamat po sa pag-imbita sa akin at ako’y nakikiisa sa inyo ngayon sa inyong selebrasyon and I wish you a productive few hours days ahead.

Maraming-maraming salamat.

2017 RBAP National Convention – Day 2 Presentations

2017 RBAP NATIONAL CONVENTION AND GENERAL MEMBERSHIP MEETING
Cordillera Convention Hall, Baguio Country Club, Baguio City
DAY 2 – MAY 30

The RBRDFI Shared Services Project: Solution for Compliance and Competitiveness
MR. DENNIS EMMANUEL C. PEÑA
Executive Director
Rural Bankers Research and Development Foundation, Inc. (RBRDFI)

SESSION 2: OPPORTUNITIES FOR FINANCIAL INCLUSION

Agricultural Guarantee Fund Pool
MS. EDNA A. ATIENZA
Program Director

MSMEs: Opportunities for Financial Inclusion
MR. BARTHOLOMEW BRILLO L. REYNES
President and Chief Executive Officer
Small Business Corporation

Supporting Financial Inclusion in the Philippines through GIZ Developing Public-Private Partnerships
MR. JIMMY LORO
Senior Advisor
GIZ RFPI ASIA


SESSION 3: SUSTAINABILITY

Capital Planning and Allocation
MR. CHRISTIAN G. LAURON
Partner, Financial Services Risk Management
SGV & Co.

OTHER PRESENTATIONS:

LENOVO

CRIF

2017 RBAP National Convention – Day 1 Presentations

2017 RBAP NATIONAL CONVENTION AND GENERAL MEMBERSHIP MEETING
Cordillera Convention Hall, Baguio Country Club, Baguio City
DAY 1 – MAY 29

Keynote Address:
MR. ALEX V. BUENAVENTURA
CEO and President
Landbank of the Philippines

SESSION 1: UPDATES ON BSP REGULATIONS

On Credit Risk Management
MS. MARY JANE T. CHIONG
Officer-in-Charge
BSP Financial Supervision Research and Consumer Protection Sub-sector

Philippine Financial Reporting Standards 9
MS. LYN I. JAVIER
Director
BSP Examination Department I

On IT Risk and Business Continuity Management
MR. MELCHOR T. PLABASAN
Acting Deputy Director and Group Head
BSP Core IT Specialist Group

The Data Privacy Act
MR. DAMIAN DOMINGO O. MAPA
Deputy Commissioner
National Privacy Commission

Other Presentations:

SPEEDFUSION NETWORKS

PLDT SME NATION

FINTQ VOYAGER

2017 RBAP NATIONAL CONVENTION PROGRAM

LIST OF CANDIDATES FOR THE 2017 RBAP ELECTIONS

BSP orders banks to beef up defenses vs cyber attacks

The Bangko Sentral ng Pilipinas yesterday said the global ransomware attack over the weekend had no impact on any Philippine financial institution even as it urged all banks and nonbanks to step up their defenses.

Asked if BSP-supervised financial institutions were targeted during the cyber extortion attacks, Deputy Governor Nestor A. Espenilla Jr. replied: “Targeted? Possible. Successfully attacked? That’s another matter—none so far.”

Reports said that at least 100,000 groups in 150 countries had been hit by online extortion attacks as of Sunday.

Espenilla said the BSP had “previously alerted the system to the danger,” hence he was “sure” that “defensive initiatives have minimized the risk.”

Last week, the BSP issued Memorandum No. M-2017-017 reminding banks to adopt multifactor authentication (MFA) in response to “growing concerns on cyber attacks involving fraudulent e-mails and websites aimed at customers and employees of financial institutions.”

Last April, the BSP ordered all financial institutions in the country to implement MFA, especially for sensitive transactions, by September amid bigger risks coming from cyber attacks.

The BSP earlier explained that the MFA employed a combination of at least two authentication factors, namely inherence or something that is inherent to the user such as fingerprint and retinal pattern; knowledge or something that the user knows such as password or PIN, and possession or something that the user has in his/her possession, including payment card or a one-time password generated through a security token or sent via SMS.

The MFA “provides for a more reliable authentication method and a stronger fraud deterrent mechanism that limits unauthorized access,” the BSP had said.

In a new memorandum issued just last Monday, the BSP reiterated the need to beef up cyber defenses in light of the recent global ransomware attacks.

“With the alarming proliferation of ransomware, BSP-supervised financial institutions are at an increased risk of loss or unauthorized disclosure of proprietary or sensitive information, operational disruptions, financial losses incurred to restore affected systems and reputational damage. Given the perceived anonymity of threat actors in perpetrating ransom payment schemes, ransomware remains a viable threat that is expected to evolve to more sophisticated and destructive forms, such as crypto-ransom ware. Web-based applications, including legitimate cloud-based services, are particularly vulnerable to this type of threat,” Espenilla said in Memorandum No. M-2017-018 issued on May 15.

“In this regard, BSP-supervised financial institutions are advised to heighten their vigilance and ensure that robust protection against ransomware is in place. BSP-supervised financial institutions should provide multiple layers of defenses by implementing appropriate controls at the host, network, and endpoint level to prevent and detect malicious codes,” Espenilla said. — BEN O. DE VERA, Philippine Daily Inquirer

Source: http://business.inquirer.net/229689/bsp-orders-banks-beef-defenses-vs-cyber-attacks#ixzz4hIZ6B8LB

BSP Memo No. 2017-018: Guidance on Managing Ransomware and Other Malware Attacks

BSP Memorandum 2017-017: Reported Incidents of Fraudulent E-mails and Websites

2017 Bankers Invitational Golf Tournament on May 28