FOREWORD Soon after the establishment of the new Bangko Sentral ng Pilipinas (BSP), the Monetary Board recognized the need to revise and regularly update the Manual of Regulations for Banks and Other Financial Intermediaries to enable the industry to better keep pace with the anticipated rapid regulatory changes that are unavoidable in a dynamic economic environment. A revised Manual would also be able to appropriately take into account the strengthened supervisory and regulatory arrangements set out in the BSP's new charter. This Manual of Regulations for Non-Bank Financial Institutions is one of the products of that effort. It benefits from the inputs of many concerned departments of the BSP as well as the various industry associations of non-bank financial institutions. We are hopeful that this new Manual and its subsequent updates will be able to more effectively disseminate the regulatory issuances of the BSP on a timely basis and provide appropriate guidance to non-bank financial institutions. We also believe that it will be a especially useful tool at this time when the BSP has come up with many regulations and issuances in response to the unprecedented challenges posed by the Asian financial crisis. Nevertheless, we recognize that there will always be room for improvement. Our task is therefore a continuing one of constant search for a better product to provide more responsive services to the public. GABRIEL C. SINGSON PREFACE The Manual of Regulations for Non-Bank Financial Institutions (the "New Manual") is not only an updated edition but also a revision of the present Manual of Regulations for Banks and Other Financial Intermediaries, Book IV (the "Old Manual"). Its adoption was impelled by certain considerations, namely: (1) that the Central Bank of the Philippines as the administrative agency of the monetary, banking and credit system which promulgated the Old Manual has been replaced by the Bangko Sentral ng Pilipinas (BSP) as the central monetary authority and (2) that the Old Manual was last updated as of December 31, 1989 and since that time, significant developments in the statutory law and the financial system of the country have rendered many of its provisions obsolete or irrelevant. To accomplish the work of proposing revisions to the Old Manual, the Monetary Board of the BSP, in its Resolution No. 1203 dated December 7, 1994, directed the creation of a multidepartmental Ad Hoc Review Committee. This committee was officially constituted under Office Order No. 2, Series of 1995 and consisted of Deputy General Counsel Melpin A. Gonzaga (Office of the General Counsel and Legal Services, as chairman; Deputy Director Ma. Dolores B. Yuvienco1 (Supervisory Reports and Studies Office); Deputy Director Rolando A. Q. Agustin (Department of Commercial Banks I); Deputy Director Danilo A. Monasterio2 (Department of Rural Banks); Deputy Director Erlinda S. J. Marzan3 (Department of Thrift Banks and Non-Bank Financial Institutions), as members; and Managing Director Fe B. Barin (Office of the Monetary Board), as adviser. The technical staff of the Ad Hoc Committee was composed of Atty. Magdalena D. Imperio, Bank Attorney III, as head; and Mr. Fernando B. Caballa, Manager II; Mr. Lauro C. Abuzo, Bank Officer III, Atty. Policarpo G. Barcarse, Manager II; Mr. Nicanor F. Rillera, Manager II; and Mr. Aristides R. Wylengco, Manager II, as members. Deputy Governor Armando L. Suratos, the BSP General Counsel,. acted as committee consultant. Under the aforesaid office order, the Ad Hoc Committee was instructed to examine, evaluate and review the provisions of the Old Manual for purposes of (1) deleting therefrom provisions which are obsolete, redundant, irrelevant, superfluous or inconsistent with law, (2) amending provisions so as to make them consistent with each other or to harmonize them with existing statutes, executive issuances and official policies, and (3) reformulating provisions to make them more responsive to the needs and concerns of the banking and financial intermediation industry. In discharging its mandated tasks, the Ad Hoc Review Committee sought the comments of certain departments of the BSP, particularly, Treasury, Foreign Exchange, Economic Research, Cash, Accounting, and Loans and Credit, on the proposed changes to provisions of the Old Manual relevant to their operations. Likewise consulted were the various associations in the non-bank financial intermediary industries. Their valuable suggestions contributed to the accomplishment of this project. 'now Director, Department of Commercial Banks II 2Retired 3Deceased The New Manual comprises substantially the regulatory issuances of the BSP, as well as those of its predecessor agency, the Central Bank of the Philippines, as they were amended or revised through the years, up to December 31, 1996. It shall serve as the principal source of all substantive regulations for non-bank financial institutions issued by the Monetary Board and the Governor of the BSP and shall be cited as the authority for enjoining compliance with the rules and regulations embodied therein. It is fervently hoped that the publication of this long-awaited new code of regulations for non-bank financial institutions will measure up to the expectations of these institutions. The Bangko Sentral ng Pilipinas > INSTRUCTIONS TO USERS The Manual of Regulations for Non-Bank Financial Institutions (the "Manual") is the comprehensive authority on the specific subjects covered therein. New rules and amendments to the rules shall immediately form part of the affected section or subsection of the Manual while repealed rules shall be deleted so that the user shall no longer refer to a separate issuance, i.e., circular or memorandum, but shall instead cite the particular section or subsection of the Manual. Non-bank financial institutions (NBFIs) governed by the Manual shall comply with the provisions thereof and any violation thereof shall be punishable under the specific and/or general provisions on sanctions. The Manual contains the rules and regulations on NBFIs subject to supervision by the Bangko Sentral ng Pilipinas (BSP) under the law. Specifically, these institutions are as follows: NBFIs performing quasi-banking functions, or quasi-banks, which are subject to BSP supervision under R.A. No. 7653, The New Central Bank Act; NBFIs performing trust and other fiduciary activities and building and loan associations (BLAs), under R.A. No. 337, as amended; nonstock savings and loans associations (NSSLAs), under R.A. 3779; and pawnshops, under P. D. No. 114. The regulations addressed to these institutions are grouped as follows: the Q Regulations, which are addressed to quasi-banks; the S Regulations, which are addressed to NSSLAs; the P Regulations, which are addressed to pawnshops; the B Regulations, which are addressed to BLAs; and N Regulations, which are addressed to other NBFIs subject to BSP supervision. As a code of regulations, the Manual contains the basic features of division into Parts, further subdivided into major topic headings which introduce the corresponding sections and subsections making up the provisions governing a major operation of the institutions subject to the regulations. Parts and major topic headings as well as coded section numbers and headings are made uniform for all the groups of regulations. Coding of sections utilizes six (6) digits; i.e., 4123Q.44. The first digit (4 in the example) refers to the type of financial institution (i.e., non-bank financial institutions as distinguished from banks or banking institutions, the regulations addressed to which institutions are contained in another Manual) to which the regulation is applicable; the second digit (1 in the example), to the Part number, and the third and fourth digits (23 in the example), to the section number. The other two (2) digits after the decimal point (44 in the example) refers to the subsection number. The letters Q, S, B, P and N are appended to the pertinent code numbers of the sections to indicate the particular category of NBFIs the regulations are addressed to, namely: quasi-banks, NSSLAS, BLAs, pawnshops and other NBFIs subject to BSP supervision, respectively. For example, Sections 4161Q, 4161S, 4161B and 4161P refer to provisions of reporting requirements of quasi-banks, NSSLAS, BLAs and pawnshops, in that order. |