Preconditions for Quasi-Banking Functions by Non-Bank Financial Institutions (NBFIs)
- Only duly incorporated NBFIs organized as stock corporations may engage in quasi-banking functions.
- Requirements for NBFIs securing BSP authority:
- Minimum adjusted capital accounts of at least P650 million or as set by the Monetary Board.
- Compliance with applicable laws, rules, orders, and BSP or Monetary Board instructions.
- Proper maintenance of accounting records, systems, procedures, and internal controls.
- No float items outstanding for more than 60 calendar days exceeding 1% of total resources.
- No past due obligations with financial institutions at application.
- Officers managing quasi-banking operations must have at least two years’ experience in similar functions.
- Fit and proper rule compliance for directors and managerial staff.
- Election of at least two independent directors and attendance at BSP-accredited director seminars.
- No unsafe or unsound practices for the last six months before application.
- Implementation of a comprehensive, board-approved risk management system appropriate to operations, supported by an operations manual and related documents submitted upon application and updated within 30 days.
Deletion of Outdated Provisions
- Subsections 4102Q.1 to 4102Q.3 of the Manual of Regulations for Non-Bank Financial Institutions are deleted.
Certification of Authority Application Procedures
- Banks and NBFIs must file applications with the appropriate BSP supervising and examining department.
- Application must be signed by the president or equivalent officer and include:
- Board of directors’ resolution authorizing the application.
- Certification affirming compliance with all preconditions.
- Information sheet.
- Oath-signed bio-data of managerial staff responsible for quasi-banking operations.
- One-year borrowing-investment program detailing:
- Portfolio distribution among underwriting, commercial paper markets, stocks and bonds, government securities, receivables financing, discounting and factoring, leasing, and direct loans.
- Expected sources of funds categorized by maturity (short, medium, long-term), interest rates, and domestic or foreign sources.
Transitory Provisions for Capital Compliance
- Thrift banks already engaging in quasi-banking but not meeting capital requirements are given two years from the circular's date to comply:
- Existing approved capital build-up programs may count toward compliance.
- If no program exists, they may apply for a capital build-up program lasting up to five years with Monetary Board approval.
- Failure to comply within two years or with an approved program requires liquidation of quasi-banking operations within one year, with licenses revoked or canceled.
- Thrift banks authorized but not engaging in quasi-banking and non-compliant with capital requirements face automatic revocation.
- NBFIs have similar two-year periods and options for capital build-up programs, with similar consequences upon failure to comply.
Effective Date
- The circular takes effect 15 days after publication in the Official Gazette or a newspaper of general circulation.