Guidelines on Govt Deposits in Banks by BSP

The Secretary of Justice ruled that the general prohibition on placing government funds in private banks remains.
Exceptions require Monetary Board approval for deposits in rural, thrift, cooperative, or designated private banks.
No government funds should be deposited in private banks without Monetary Board authorization.

Government cash balances should be deposited with Bangko Sentral, with minimal working balances in government banks or Monetary Board-approved banks.
Banks may hold deposits beyond minimum balances if political subdivisions have outstanding loans with them.

Private banks cannot accept government funds or borrow government money without Monetary Board approval.

Government majority-owned banks may accept government funds.
Private banks may accept deposits only with Bangko Sentral’s approval.
Local governments preferably deposit in government banks; exceptions require Monetary Board and Bangko Sentral approvals.
Thrift, rural, and cooperative banks may act as official depositories within their location limits.
Provinces without accessible government banks may request Monetary Board approval to use private banks.
Banks may accept demand, savings, or time deposits.
Authorization to accept deposits does not obligate government entities to deposit there.

Deposits limited to minimum working balances unless excess amounts correlate with outstanding loans, with Monetary Board approval.
Private banks’ government fund holdings capped at 200% of net worth.
Banks with directors/officers who hold government elective or appointive positions are prohibited from accepting deposits from such government units unless the bank is the sole bank in the area.

Government-owned or controlled corporations refer to those created by special laws, excluding government financial institutions and certain other corporations.
Minimum working balances are amounts necessary for efficient government transactions as determined by the Department of Finance.

Applications must be signed by the bank president and filed with the Bangko Sentral’s supervising department.
A certification of compliance with requirements must accompany the application.
Supporting documents include resolutions or written authorizations from relevant government units.
Compliance must be continuously maintained after authority is granted.

Banks must meet financial health standards including net worth, capital, no recent losses, no reserve deficiencies, compliance with loan ratios, and maintenance of accounting and internal controls.
Must have no past due obligations to Bangko Sentral or government financial institutions.
Must be a member in good standing of the Philippine Deposit Insurance Corporation.

Banks must submit quarterly reports of government deposits to Bangko Sentral within five banking days after each reference month.

Unauthorized deposits or borrowings will be debited from the bank’s Bangko Sentral account.
Authority to accept government funds may be revoked.
Falsification in certification can lead to fines and disqualification.

The Circular does not amend or repeal existing National Government rules on cash placement.
Manual of Regulations provisions on liquidity and reporting remain effective.
The Circular takes effect 15 days after publication.