QuestionsQuestions (Republic Act No. 6426)
RA 6426 is titled the “Foreign Currency Deposit Act of the Philippines.” It establishes a system allowing deposits of acceptable foreign currencies with designated Philippine banks, subject to the Act’s requirements.
Any person, natural or juridical, may deposit foreign currencies with designated Philippine banks, as long as it complies with the Act.
Only foreign currencies acceptable as part of the international reserve may be deposited, and not those required by the Central Bank to be surrendered under RA 265.
The Central Bank designates the banks, upon application, for the purpose of accepting such foreign currency deposits.
They may: (1) accept foreign currency deposits and accept foreign currencies in trust (with allowance for numbered accounts); (2) issue certificates evidencing the deposits; (3) discount the certificates; (4) accept the deposits as collateral for loans, subject to Central Bank rules; and (5) pay interest in foreign currency on the deposits.
No. Section 3 allows numbered accounts for recording and servicing the deposits.
Banks must maintain at all times a 100% foreign currency cover for their deposit liabilities. This is generally mandatory, except the Monetary Board may, by unanimous vote, otherwise prescribe or allow.
At least 15% of the foreign currency cover must be in the form of foreign currency deposits with the Central Bank.
The balance may be in foreign currency deposits or foreign currency loans or securities with short-term maturities and readily marketable characteristics.
Yes. The Act allows such loans if they are export-oriented or registered with the Board of Investments, subject to Monetary Board limitations.
The foreign currency cover must be in the same currency as the corresponding foreign currency deposit liability.
There shall be no restriction on withdrawal by the depositor or transferability abroad, except those arising from the contract between depositor and bank.
Section 6 provides a specific tax exemption: interest belonging to non-residents not engaged in trade or business in the Philippines is exempt from income tax.
They take effect after publication in the Official Gazette and in a national newspaper for at least once a week for three consecutive weeks. If new rules decrease depositor rights, the rules existing at the time of deposit govern.
It is governed in accordance with Republic Act No. 1405.
They are insured under Republic Act No. 3591, as amended, and insurance payment must be in the same currency in which the insured deposits are denominated.
A willful offender, upon conviction, faces imprisonment of not less than one year nor more than five years, or a fine of not less than PHP 5,000 nor more than PHP 25,000, or both, at the court’s discretion.
If one or more provisions are held unconstitutional, the remaining provisions remain valid and are not affected.
It repeals, amends, or modifies acts, executive orders, rules, or parts thereof inconsistent with RA 6426, without prejudice to deposits made thereunder.