BSP CL 2017-006: Accredited Rural Financial Institutions for the Purpose of Implementing the Agri-Agra Reform Credit Act of 2009
BSP Grants Regulatory Relief to Banks/Non-Bank Financial Institutions with Quasi-Banking Functions (NBQBs) Affected by Typhoon “Nina”
The Bangko Sentral ng Pilipinas (BSP) is granting temporary regulatory and rediscounting relief measures to banks/non-bank financial institutions with quasi-banking functions (NBQBs) with head offices (HOs) and/or branches/extension offices (EOs)/microfinance-oriented banking offices (MBOs) located in the areas which were devastated by Typhoon “Nina”, based on Situation Report No. 12 dated 2 January 2017 of the National Disaster Risk Reduction and Management Council, as follows:
IV-A Batangas, Cavite, Laguna, Quezon, Rizal
IV-B Marinduque, Occidental Mindoro, Oriental Mindoro, Romblon
V Albay, Camarines Norte, Camarines Sur, Catanduanes, Masbate, Sorsogon
VIII Northern Samar
Similar relief measures were extended by the BSP to banks/NBQBs with HOs and/or branches/EOs/MBOs in provinces/cities that were affected by natural calamities, such as last year’s El Niño Phenomenon and Typhoon “Lawin”.
As approved on 12 January 2017 by the Monetary Board, the BSP’s policy-making body, the temporary relief measures shall be made available to banks/NBQBs which will apply for the same:
For Thrift Banks (TBs)/Rural Banks (RBs)/Cooperative (Coop) Banks/NBQBs
a. Excluding outstanding loans of borrowers in affected areas from the computation of past due ratios provided these are restructured or given relief;
b. Non-imposition of penalties on legal reserves deficiencies of TBs/RBs/Coop Banks/NBQBs with HOs and/or branches/EOs/MBOs in the affected areas;
c. Moratorium on monthly payments due to BSP for banks with ongoing rehabilitation programs;
d. Subject to BSP approval, booking of allowance for probable losses on a staggered basis over a maximum period of 5 years for all types of credits extended to individuals and businesses directly affected by the calamity; and
e. Non-imposition of monetary penalties for delays in the submission of supervisory reports.
For All Banks
f. Allowing banks to provide financial assistance to their officers and employees who were affected by the calamity including those assistance that may not be within the scope of their existing BSP-approved Fringe Benefit Program.
For All Rediscounting Banks
g. Granting of a 60-day grace period to all rediscounting banks in the affected areas to settle their outstanding rediscounting obligations as of 25 December 2016 with the BSP; and
h. Allowing banks to restructure with the BSP, on a case-to-case basis, the outstanding rediscounted loans of end-user borrowers affected by the calamity.
These measures will be in effect for a defined period and covered by additional specific and other prudential conditions.
The electronic processing of checks shall commence on 20 January 2017.
The Philippine Clearing House Corporation (PCHC) is set to implement the clearing of checks via electronic presentment through its Check Image Clearing System (CICS). Under the CICS, only the digital images of checks and their electronic payment information will be transmitted to the paying bank, allowing a shorter turnaround time for funds to be credited to the depositors’ accounts.
According to PCHC, depositors who transact with CICS-compliant banks/branches may already withdraw on the next banking day against their validated check deposits. Meanwhile, banks that are still on paper-based check processing will continue to render the service under existing timelines.
The public is likewise encouraged to get in touch with their banks about the new system and reminded on how to properly prepare checks under the CICS.
To achieve faster transition to the new process, the BSP enjoins the remaining non-CICS-compliant banks to take necessary measures to meet the technical requirements of CICS.
The implementation of CICS forms part of the reforms espoused by the Bangko Sentral to achieve a more efficient and safe payment system as this is critical to the promotion of the country’s Financial Stability.
In line with the thrust of the Bangko Sentral ng Pilipinas to create an enabling regulatory environment for innovations and allow banks to exponentially expand reach and serve clients more efficiently, the Monetary Board recently approved the guidelines for new bank service channels and relaxed existing regulations on deposit taking activities outside bank premises.
Under the new regulations, banks are now allowed, with prior BSP authorization, to serve clients through cash agents contracted by banks to accept and disburse cash in its behalf, facilitating online self-service deposits, withdrawals and fund transfers, as well as bills payment. Cash agents can also perform Know-Your-Customer procedures as well as collect and forward application documents for loan and account opening. They may also sell and service insurance as may be authorized by the Insurance Commission. These cash agents are typically cash rich third party entities with many outlets that conduct regular business in fixed locations anywhere in the country, such as convenience stores, pharmacies and other highly accessible retail outlets.
Cash agents enable banks to leverage on innovative digital solutions to serve a wider client base, particularly in the low-income and rural areas where there is limited commercial incentive to establish a full branch or even a micro-banking office (MBO). Through this new cost-efficient service channel, serving the currently unbanked and low-income segments can become more viable and sustainable for banks. Data from the BSP shows that more than 36% of all the municipalities in the country have no banking presence although most of these are served by a variety of non-bank financial institutions like pawnshops, cooperatives, and lending investors.
In addition to these new service delivery models, the Monetary Board also relaxed existing regulations on offsite deposit servicing as well as deposit solicitation, by removing highly prescriptive operational requirements and conditions before banks may engage and offer these services. The amended regulations provide banks with more flexibility in designing appropriate and cost-efficient ways to render deposit pick-up and delivery services and as a result, enhance client experience.
To ensure the safety and soundness of banks as well as to uphold consumer protection, the guidelines emphasize banks’ responsibility for ensuring the adequacy of risk management and internal control systems for these liberalized deposit servicing activities. The BSP will evaluate the quality and sufficiency of these risk management and control systems before granting authorization to perform banking services outside bank premises.