Legal Basis for Enforcement
- Enforcement actions are pursuant to Section 37 of R.A. No. 7653 (The New Central Bank Act).
- Specifically addresses non-compliance with the submission of the Monetary Board's opinion on the probable effects of borrowings.
Requirement Under Section 123 of R.A. No. 7653
- Borrowers (Government or its political subdivisions or instrumentalities) must submit the Monetary Board’s opinion.
- The opinion must include probable effects on monetary aggregates, price level, and balance of payments.
Penalties for First Offense
- Monetary penalty imposed, computed according to Appendix 67 of the Manual of Regulations for Banks.
- Stern warning to the bank regarding the consequences of subsequent offenses.
Penalties for Second Offense
- Suspension of lending operations to the Government or its political subdivisions/instrumentalities for 6 months.
- Written reprimand issued to the officers or members of the committee and/or Board of Directors who approved the loan.
Penalties for Third Offense
- Suspension of lending operations to the Government or its political subdivisions/instrumentalities for 1 year.
Effective Date
- The Circular takes effect 15 days after its publication in a newspaper of general circulation.