BSP caps investments of non-stock savings, loan associations

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has put a cap on the amount of investments of non-stock savings and loan associations (NSSLA) to protect the funds of its members.

The central bank has approved the rules and regulations limiting the investments of NSSLA to less than 10 percent of their total assets, unless otherwise approved by the regulator.

Likewise, the guidelines state the investments must be safe, readily marketable, high grade, and locally-issued.

“The guidelines clearly define the allowable investments and limit of such investments that NSSLA can enter into,” the BSP said in a statement.

The establishment of a cap on investments is part of the central bank’s reform agenda to promote a more responsive regulatory environment for non-bank financial institutions under its jurisdiction.

NSSLA are non-stock, non-profit corporations engaged in the business of accumulating members’ savings for lending to households by providing long-term financing for home building or development and for personal finance.

Furthermore, the new guidelines also raised the bar on the establishment of the true identity and eligibility of persons to become members of NSSLA.

The regulator explained the know-your-member (KYM) guidelines set clear BSP’s expectations on the responsibilities of the board of trustees and management of NSSLA to establish and implement effective risk management system and risk control.

The rules and regulations also set out the documentary requirements for membership, to ensure that all members are eligible.

“It aims to protect the NSSLA members by preventing the use of NSSLA, by unscrupulous persons, as a means to profit or to take advantage of their nature and operations,” the BSP said.

Latest data from the central bank showed total assets of NSSLA rose 2.6 percent to P173.4 billion as of end-June last year from P169 billion in end-June 2016.

The bulk of the industry’s assets at 71.1 percent was channeled to loans that went up 4.2 percent to P123.3 billion.

On the other hand, almost a quarter of the resources were directed to more liquid assets such as cash and due from banks at P20.7 billion, as well as investments at P21.9 billion.

The industry’s liabilities rose 7.1 percent to P48.4 billion as of end-June last year as deposit liabilities comprising mainly from members increased 5.5 percent to P38.6 billion. NSSLA’ capital of P125 billion continued to be the major source of funding, making up 72.1 percent of total assets.

As of end-June, there were 65 operating NSSLA representing 1.2 percent of the 5,524 operating non-bank financial institutions supervised by the BSP.