IMF pushes immediate changes in BSP charter

MANILA, Philippines - The International Monetary Fund (IMF) is urging legislators to enact proposed amendments to the charter of the Bangko Sentral ng Pilipinas (BSP).

In a statement, IMF said proposed amendments to RA 7653 or the New Central Bank Act of 1993 should be approved without further delay to strengthen the supervisory powers of the BSP.

“As in other countries, supervisory authorities should be provided with sufficient legal powers and protection to meet their core mandate,” IMF said.

The IMF said proposed changes to the BSP charter would lift the remaining constraints of the bank secrecy laws on examiners and at the same time enhances the scope for risk-based supervision including risk based approach to capital requirements.

IMF said the amendments would also authorize the BSP to issue its own debt securities to strengthen the effectiveness of monetary management.

The state-run Philippine Deposit Insurance Corp. (PDIC) is also supporting initiatives to amend the BSP charter to give monetary authorities additional powers.

PDIC president Jose Nograles said the proposed changes would strengthen its capability to regulate and supervise banks and allow the central bank greater flexibility to deal with distressed institutions.

The PDIC has likewise put forward an eight-point proposal in support of the BSP Charter amendment which may help the central bank better promote the general well-being of the banking system.

Among the amendments proposed by PDIC to the New Central Bank Act is Bridge Bank Authority, which is an alternative means of bank failure resolution practiced in countries such as the US.

Nograles added that among the co-regulatory acts that PDIC is recommending is the inclusion of an additional ground for the closure of a bank. This is the actual cessation of operation by a bank notwithstanding that the bank represents itself to be a going concern. 

PDIC is also proposing the grant of an express authority to dispose of assets of banks under receivership even without consent of closed banks’ stockholders.

Other proposals are: authority to prescribe the terms and conditions and qualifications of banks’ rehabilitators; extension of receivership period for another 90 days; and inclusion of franchise or license as asset of closed banks.