SEC exempts RBs from FS, GIS ruling until 2004

The Securities and Exchange Commission (SEC) has exempted the rural banks from submitting their annual financial statement and the general information sheet (GIS) covering the periods 1998 to 2002.

However, the rural banks must submit proof that they have been religiously fulfilling all the documentary requirements based on the regulations of the Bangko Sentral ng Pilipinas (BSP).

After a series of dialogues with the officers and directors of the Rural Bankers Association of the Philippines (RBAP), SEC Chairman Lilia R. Bautista said that government has agreed not to penalize the rural banks that have failed to submit their annual FS and GIS "as long as they can prove that they have been submitting religiously the annual BSP requirements."

"We will not slap a fine or revoke the working licences of the delinquent banks as long as they have complied with all BSP requirements," Bautista said during a RBAP symposium last week.

However, the SEC head made it clear that the force of the law will be fully and strictly implemented started next year without exception. The reports must be based on international auditing standards.

As of 2002, there were 977 rural banks still registered with the SEC. Of the total number, 431 or 44 percent have not submitted their annual FS since 1998. Likewise, 508 or nearly 60 percent have not their annual GIS since 1998.

In the same forum, Bautista urged the rural banks to strictly adopt the international practice of good corporate governance with regards particularly with the appointment of an independent director in their respective board of directors.

During the earlier dialogue, RBAP president Danilo R. Arcenas had said that the perculiar nature of rural banks made it difficult to comply with the best practices based on the principle of good corporate governance.

Arcenas explained that most rural banks were run by families and that getting an independent director was a complete deviation from the standard albeit old practice.

Bautista said that the SEC will be lenient on the issue of independent directors "for the mean time."

"But I encourage the rural banks to present to us a viable and acceptable alternative or replacement for the requirements of best practices or good corporate governance," the SEC Chairman said.

But by next year, the government regulator will have to strictly enforce all regulations regarding good corporate governance if it is to protect the investing public, she reminded.