Congress hikes BSP capital base to P200 billion

MANILA, Philippines — The House of Representatives has approved a bill increasing the capitalization of the Bangko Sentral ng Pilipinas (BSP) from P50 billion to P200 billion.

Bill 7742, likewise, proposes amendments to the BSP charter to reinforce the banking regulator’s corporate and financial viability and strengthen its monetary stability functions.

Eastern Samar Rep. Ben Evardone, who chairs the Committee on Banks and Financial Intermediaries, said yesterday that aside from the P150-billion additional capitalization, the bill seeks to restore BSP’s tax-exempt status.

He said the proposed changes in the regulator’s charter include the grant of authority to establish adequate loss allowances and reserve buffers for it to better manage its operational risks.

 “We take cognizance of the unique functions and responsibilities of the Bangko Sentral in safeguarding price and monetary stability as the first layer of defense against unstable conditions prevailing in international markets,” he said.

The Bangko Sentral ng Pilipinas (BSP) welcomed the House approval to amend its charter, saying it would pave the way for an even stronger local banking industry.

BSP Governor Nestor Espenilla Jr. said the regulator is hopeful Congress would pass the proposed legislation amending the BSP charter before the end of the year.

 “This will help BSP fulfill its mandates more effectively and will ensure the banking system remains a pillar of strength for the Philippine economy amid evolving trends and external challenges,” Espenilla said.

According to Evardone, the measure “also aims to achieve and maintain monetary stability by authorizing the BSP to issue its own securities, as well as to obtain information from non-bank private sector.”

To strengthen central bank’s prudential supervision functions, the bill proposes to expand the entities under its supervision to include other categories of financial institutions, and grant authority to impose sanctions on transfers and acquisitions of substantial shares of banks and quasi banks without BSP approval.

The bill removes the thresholds in the growth of monetary aggregates and credit as guiding principles in monetary administration.

The bill, likewise, provides legal protection for BSP officials and staff when performing official duties similar to that provided to officers and employees of the PDIC.

It grants the regulator tax exemption from court processes relating to collateral obtained from banks similar to that enjoyed by the Land Bank of the Philippines, and authority to deputize legal staff in extrajudicial foreclosure of mortgaged properties.

Evardone said the proposals would “help transform the Bangko Sentral into a more effective and dynamic central monetary authority that can keep pace with the demands of its mandate.”  – With Lawrence Agcaoili