BSP Circular No. 681 Revised Check Clearing Rules

Drawee banks must stamp returned checks indicating date and reason for dishonor.
Return Stamp must show "Drawn Against Insufficient Funds", "No Funds", or "Insufficient Funds" when applicable.
In cases of stop payment orders where insufficient funds exist, the stamp must reflect both issues.
Checks dishonored due to NSF must be returned by 7:30 AM the day after original presentation to the clearing house.
One clearing window exists for NSF returns in the Integrated Greater Manila Local Exchange and Regional Local Exchange.
Clearing adjustments reverse the debit and credit entries to restore account balances to status before settlement.
Special regulations apply for checks dishonored outside the clearing system with returns due the following banking day.

Returned technical dishonors must be sent to the negotiating bank by the afternoon clearing.
Two separate clearing windows for technical returns: AM clearing from 2:00 AM - 7:30 AM, PM clearing coinciding with afternoon clearing.
AM technical returns are back-dated to the original presentation date for accounting purposes.
Technical dishonors outside clearing must be returned within the next banking day.

Banks may participate directly or indirectly in clearing through Philippine Clearing House Corporation (PCHC).
Direct participants subject to settlement risk controls including value dating and overdraft ceilings.
Overdraft ceiling: clean Overdraft Credit Line (OCL) at 15% of BSP rediscounting line plus collateralized OCL.
Eligibility to avail OCL depends on CAMELS rating, capital adequacy ratio, and reserve history.
Interest on OCL is the higher of 0.1% per day or 91-day Treasury Bill rate plus 3%.
Overdraft usage limited to 5 clearing days within 30-day rolling period before suspension.
Overdrafts beyond ceiling lead to unwinding of clearing items or clearing exclusion and denial of BSP credit facilities.
Indirect participants have caps on net losses passed to their conduits composed of deposits and credit lines.

NOW accounts held at banks other than drawee bank may be cleared via PCHC.
Withdrawals from NOW accounts are governed by the same temporary overdrawings rules as demand deposit accounts.

Banks must cover BSP account overdrafts by the next clearing day including interest.
Failure results in exclusion from clearing and denial of BSP credit facilities.
Continuous overdrafts for 5 days lead to clearing exclusion, prohibition on new loans/investments (except government securities), dividend declarations, and branch establishment.
Denial of credit facilities lasts until 15 consecutive banking days of credit balance with BSP.
Overdrawings deducted from available reserves for regulatory compliance.

Banks must follow clearing procedures per the Philippine Clearing House Corporation's Clearing House Rules and Regulations.

Appendix 28, 28a (clearing procedures and regional clearing operations) deleted.
Appendix 31 amended for direct clearing participants implementing guidelines.
Appendix 39 amended for settlement timelines relating to interbank transactions and reserve requirements.
Circular took effect on January 1, 2011 as mandated by the Monetary Board.