Question & AnswerQ&A (BSP CIRCULAR NO. 454)
The main purpose of BSP Circular No. 454 is to amend Circular No. 398 governing the credit card operations of banks and subsidiary/affiliate credit card companies to align with global best practices and to update regulations under the Manual of Regulations for Banks (MORB) and Manual of Regulations for Non-Bank Financial Institutions (MORNBFI).
Section 4337Q is added to the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) to incorporate the provisions of Circular No. 398, Series of 2003, as amended.
‘Subsidiary’ is defined as a corporation or firm of which more than fifty percent (50%) of the outstanding voting stock is directly or indirectly owned, controlled or held with the power to vote by a bank or other financial institution.
An ‘affiliate’ refers to an entity linked directly or indirectly to a bank or financial institution through any of the following: 1) ownership/control of at least 10% of the outstanding voting stock; 2) interlocking directorship or officership; 3) common stockholders owning at least 10% of each entity; or 4) management contracts or arrangements allowing direction of management and policies.
The amendment expands the term to include ‘subsidiary/affiliate credit card companies’ to cover affiliates as well, thus broadening the scope of regulated entities under credit card operations.
Disclosure must include the application of payments, manner of currency conversion, definition or description of blended exchange/conversion rates (e.g., Mastercard/Visa international rates plus mark-up), conversion commissions, and other currency conversion charges and costs for transactions made in foreign currencies or outside the Philippines, as well as payments made in currencies other than the billing currency.
Prohibited conduct includes: use/threat of violence; use of obscenities or insults amounting to criminal offense; improper disclosure of cardholder information; threats to take unlawful actions; false communication of credit information; deceptive means to collect debts; and making contact at unreasonable or inconvenient times without permission.
Three new accounts: 1) Restructured Loans - Credit Card Receivables (for renegotiated accounts due to credit quality concerns); 2) Past Due Restructured Loans - Credit Card Receivables (accounts past due under existing rules); and 3) Items in Litigation - Restructured Loans - Credit Card Receivables (accounts under court proceedings).
When the credit card receivable's original terms and conditions are renegotiated, modified, lengthened, or postponed due to credit quality concerns, classified as restructuring unless the modification is only at cardholder request without indication of weakness/deterioration at the time of renegotiation.
This Circular takes effect fifteen (15) days following its publication either in the Official Gazette or in a newspaper of general circulation.