Revised Guidelines on Authorized Govt Banks

Legal basis and framework

The circular is issued under the mandate of the Department of Finance for the sound and efficient management of the financial resources of the Government and its instrumentalities, grounded on the Administrative Code of 1987.
The circular is also issued in line with Executive Order No. 127, series of 1987.
The circular implements Executive Order No. 55 (s. 2011) on the Treasury Single Account (TSA) system for better cash management and greater transparency in public financial management.

Coverage and covered depositors

The circular covers all National Government Agencies (NGAs).
The circular covers all Government-Owned or -Controlled Corporations (GOCCs).
The circular covers Government Financial Institutions (GFIs) and Government Instrumentalities with Corporate Powers (GICPs) / Government Corporate Entities (GCEs) as defined for purposes of the circular’s rules.
The circular covers all Local Government Units (LGUs).
The circular applies to the use and designation of authorized government depository banks for government deposits and depository accounts.

Defined terms for implementation

An Authorized Government Depository Bank is a bank where Government Agencies are allowed by law to deposit Government Funds and maintain depository accounts, or, by way of exception, a bank allowed or designated by the DOF and the Monetary Board to hold government deposits subject to prescribed rules and regulations.
A Government Financial Institution (GFI) is a financial institution or corporation where the government directly or indirectly owns majority of the capital stock and which is either (1) registered with or directly supervised by the Bangko Sentral ng Pilipinas (BSP) or (2) collecting or transacting funds or contributions from the public and thereafter placing them in financial instruments or assets such as deposits, loans, bonds, and equity, including the Government Service Insurance System (GSIS) and the Social Security System (SSS).
Government Funds include public moneys of every sort and other resources pertaining to any agency of the government.
A Government Instrumentality with Corporate Powers / Government Corporate Entity (GICP/GCE) refers to instrumentalities or agencies of government which are neither corporations nor agencies integrated within the departmental framework, but vested by law with special functions or jurisdiction, endowed with some or all corporate powers, administering special funds, and enjoying operational autonomy through a charter, including the named examples: Manila International Airport Authority, Philippine Ports Authority, Philippine Deposit Insurance Corporation, Metropolitan Waterworks and Sewerage System, Laguna Lake Development Authority, Philippine Fisheries Development Authority, Bases Conversion and Development Authority, Cebu Port Authority, Cagayan de Oro Port Authority, San Fernando Port Authority, Local Water Utilities Administration, and Asian Productivity Organization.
A GOCC refers to an agency organized as a stock or non-stock corporation, vested with functions relating to public needs, owned by the Government of the Philippines directly or through its instrumentalities wholly or, for stock corporations, to the extent of at least a majority of outstanding capital stock; for purposes of the circular, GOCC includes GICP/GCE and GFI as defined in the circular.

Policy, general principles, and TSA alignment

The Department of Finance formulates, institutionalizes, and administers policies to ensure government resources are managed and mobilized judiciously to support development objectives, promote the welfare of the people, and accelerate economic growth and stability.
The Bureau of Local Government Finance (BLGF) assists the DOF in formulating and implementing policies on fund management for local finance.
The Treasury Single Account (TSA) system is implemented through DOF and the Bureau of the Treasury (BTr) under Executive Order No. 55 (s. 2011).

Core rules on authorized government deposits

NGAs must adopt the TSA system for the collection of fees, charges, and other revenues and for the remittance of such revenues to the National Treasury, consistent with Executive Order No. 55.
All NGAs, GOCCs, and LGUs specifically allowed by law to retain income and/or for operations and/or working balances must deposit and maintain accounts with GFIs with a universal bank license and a CAMELS rating of at least 3.
Because Executive Order No. 55 (s. 2011) removes revenue and expenditure floats, NGAs/GOCCs/LGUs may engage a payment and collection services bank other than those referred to under the CAMELS-universal-bank GFI rule through a transaction fee-based arrangement without prior approval, subject to conditions.
In GOCCs, the payment and collection bank engagement under the transaction-fee arrangement does not require prior DOF approval; in LGUs, it does not require prior BLGF approval.
In NGAs, implementing any payment and collection system must require concurrence of BTr to ensure consistency with the TSA framework.
A non-GFI payment/collection bank must serve only as a collection bank for the account of the NGA/GOCC/LGU.
For collection banks, all collections must be transferred to any GFI under the CAMELS-universal-bank rule on the next banking day counted from the collection date.

When accounts outside GFIs may be allowed

Accounts with banks other than the GFIs required under the CAMELS-universal-bank rule may be allowed when the following conditions are met.
The first circumstance is when the GFIs referenced under the CAMELS-universal-bank rule cannot provide the necessary banking products and services.
The second circumstance is when there are no accessible (within the twenty (20) kilometer radius) GFIs, including collection facilities; the Requesting Agency must furnish the DOF/BTr/BLGF a vicinity map showing location and distance between the requesting agency, the referenced GFIs, and the proposed bank.
The third circumstance is when security and safety require opening and maintaining an account in the proposed bank; the Requesting Agency must furnish the DOF/BTr/BLGF an Independent Report or Certification from the Philippine National Police Provincial Office confirming the existence of the security risks.
For GOCCs and LGUs, a maintaining balance may be allowed for operating expenses of up to three (3) months, after a cost-benefit analysis, or up to the maximum deposit insurance coverage of PDIC of PHP 500,000.00, whichever is lower.
All funds deposited under the security/availability exception framework must be limited to operating funds, and no other deposits may be maintained for special projects or investment purposes.
Any amount in excess of the authorized cash balance must be transferred to any GFI that meets the CAMELS-universal-bank rule.

Prior approval when conditions are not met

Where the Requesting Agency cannot meet the conditions under the CAMELS-universal-bank requirement and the account-outside-GFI circumstances, the Requesting Agency must seek prior approval to open and maintain an account in the proposed bank.
For GOCCs, prior approval is from the DOF; for NGAs, prior approval is from the BTr; for LGUs, prior approval is from the BLGF.
Requests must be supported by specific requirements submitted to the DOF/BTr/BLGF as applicable.

Approval requirements for requesting agencies

A Requesting Agency must submit a letter from the Head of the Requesting Agency or its duly designated officer requesting approval, stating the terms of the deposit, the purpose, and the specific reasons and circumstances for not meeting the conditions.
For a GOCC, the request must include: a copy of the Board Resolution authorizing the GOCC to deposit funds with the proposed bank; the latest audited financial statements issued not more than 18 months at the time of submission; the latest Schedule of Cash and Short-term Investment Balances; and a Summary of its Daily Collection Report for the last three months.
For an LGU, the request must include: a Certification from the proposed bank that no elective or appointive local government official of the concerned LGU is a director, officer or stockholder of the bank, unless certified that it is the only bank operating in the territorial jurisdiction of the LGU; a copy of the Resolution of the local Sanggunian authorizing the LGU to deposit funds with the proposed bank with approval of the Local Chief Executive; and a copy of the Certification from DILG on the Seal of Good Housekeeping or any DILG document showing that the LGU passed the Seal of Good Housekeeping.
When security and safety are the reasons, the Requesting Agency must submit an Independent Report or Certification from the Philippine National Police Provincial Office confirming security risk existence.
The request must include the proposed bank’s latest CAMELS rating issued by the BSP.
The request must include a vicinity map showing location and distance between the Requesting Agency, the GFIs referenced under the CAMELS-universal-bank rule, and the proposed bank.
The request must include a Notarized Waiver in favor of the BTr and the proposed bank to allow BTr, in the case of NGAs, to have oversight authority on the bank account and for the bank to provide any required reports/statements to BTr.
The request must include other information the DOF/BTr/BLGF may require during evaluation.

Transfer of funds when exceptions end

When a GFI under the CAMELS-universal-bank rule establishes or operates a branch within the territorial jurisdiction or locality where the NGA/GOCC/LGU (or its branches, field offices, departments, divisions, or operating units) holds or conducts office or business, the NGA/GOCC/LGU must transfer funds to the CAMELS-universal-bank GFIs.
The same transfer obligation applies when the circumstances under the account-outside-GFIs conditions are no longer prevailing.
The transfer must be completed within three (3) banking days from the time the exceptional circumstance is no longer prevailing, whichever comes first.
For NGAs, proper reporting of cash balances on the bank accounts must be made to the BTr or its field offices before and after closure of the account with the proposed bank.

Sanctions for violations

Any violation of the circular is a ground for sanctions.
For a bank other than those referred to under the CAMELS-universal-bank GFI rule, the DOF shall recommend to the BSP the cancellation of authority to accept government deposits (if already granted) and/or disqualification to act as a government depository for not more than one (1) year, without prejudice to other BSP sanctions.
For NGAs/GOCCs/LGUs, the Heads of such agencies/entities are responsible for compliance with the circular, without prejudice to criminal and/or administrative liability under existing laws, rules, and regulations.

Supersession and repealing effect

The circular supersedes DOF Order No. 27-05 dated 09 December 2005, DOF Order No. 32-03 dated 10 November 2003, DOF Order No. 11-99 dated 24 February 1999, and all other DOF issuances and regulations inconsistent with it.