The proposal to amend the charter of the Bangko Sentral ng Pilipinas (BSP) has made it past the House Committee on Banks and Financial Intermediaries, which agreed to raise its capital to P200 billion.
BSP Deputy Governor Diwa C. Guinigundo said the proposed BSP charter would strengthen the BSP as a central monetary authority.
“The charter amendments provide for higher capitalization, tax exemption, ability to put up reserves against unforeseen events, which may affect the operations of the BSP,” he told the BusinessMirror.
The capital of the BSP will be increased to P200 billion subscribed in full by the national government. Its capital structure would be reviewed every five years upon joint recommendation by the secretaries of finance and budget, as well as by the Monetary Board.
The capital increase has long been needed, and central bankers are looking forward to having the capital boost soon given that Manila and its neighbors are headed for economic integration down the line.
“If we were able to wait 31 years, what is one to two years more? We need to observe the procedures in Congress in legislating important pieces of legislation,” Guinigundo said.
Banks and Financial Intermediaries Chairman Rep. Nelson Collantes said they are optimistic the bill will pass into law but he refused to set a timeline.
“In the last four to five Congresses, they failed to pass this. We have done one more step. We like to craft amendments to the BSP charter that can stand the test of time. We consulted almost everybody,” he told the BusinessMirror.
He said the P200-billion BSP capital will be financed by the national government. He added the BSP may also issue bonds and similar instruments under the new charter.
After the approval in the House committee level, there will be a plenary and later the bill is transmitted to Senate for deliberation.
“According to Collantes, they will be coordinating with Senate Committee on Banks chaired by Sen.Sergio Osmeña for their own version. There will be discussion within Senate, then there will be bicameral conference to reconcile both version,” Guinigundo said.
He said the charter amendments also assign additional responsibility to the BSP to ensure financial stability in the country’s payments and settlement system.
“The coverage of supervisory and regulatory authority of BSP was also expanded,” he said.
Under the draft bill, the BSP will oversee the payment and settlement system in the Philippines in accordance with sound and prudent practices.
The payment and settlement system refers to a set of instruments and arrangements that ensures the efficient circulation of money and safe transfer of financial values.
The BSP will provide policy directions in the areas of money, banking and credit. It will have supervision over the operations of banks and exercise such regulatory powers over the operations of finance companies and nonbank financial institutions performing quasi-banking functions, such as credit-card companies, money changing businesses, pawnshops, e-money issuers, money forwarding businesses, payment and settlement system operators and other institutions performing similar functions, as may be determined by the Monetary Board, consistent with the mandate of the Bangko Sentral to provide policy direction in the areas of money, banking and credit.