Senate ratifies new Central Bank Act

MANILA, Philippines — The Senate has ratified the bicameral conference committee report on a bill increasing the capitalization of the Bangko Sentral ng Pilipinas’ (BSP) from P50 billion to P200 billion and strengthening its regulatory powers.

Sen. Francis Escudero, chairman of the committee on banks, financial institutions and currencies, said the panel – composed of delegates from Senate and the House of Representatives – adopted entirely the Senate version except for one amendment. 

“The (committee) removed the tax provision that will go to the capitalization of the BSP and simply included the dividends that they will be remitting to the government which will be made part of the increased capitalization of the BSP,” Escudero said.

In reconciling the disagreeing provisions on the versions of the two chambers, Escudero told his colleagues the declared dividends will be deposited in a special account and earmarked for the payment of BSP’s increase in capitalization.

Such dividend payments shall be released and disbursed immediately and shall continue until the increase in capitalization has been fully paid.

“That’s the explanation for the abbreviated sponsorship remarks of the bicameral conference committee report,” Escudero said.

Senate Bill No. 1297 and House Bill No. 7742 which amended Republic Act 7653, otherwise known as “The New Central Bank Act,” further empowers the central monetary authority’s mandate in protecting the banking system.

The BSP’s expanded supervisory power will now include other categories of financial institutions, full flexibility to conduct risk-based supervision of financial institutions and has been given more teeth in imposing administrative and criminal sanctions, to include, among other things, forfeiture of profits from unauthorized financial transactions.

It also has been granted authority to impose sanctions on transfers and acquisitions of substantial shares of banks and quasi-banks without its approval.

The BSP will have the authority to require from any person or entity “any data for statistical and policy development purposes” in relation to the discharge of its functions and responsibilities although the release of such data is subject to prevailing confidentiality laws.

These amendments will empower the BSP to effectively respond to the challenges and innovations of a globalized economy and better perform its constitutional mandates, Escudero said.

“Indeed, an empowered BSP is indispensable in ensuring a competitive, robust and inclusive economy attractive to investments and business that generate employment and promote inclusive growth and a financial system that will support a higher quality of life for Filipinos,” Escudero said. 

“Undoubtedly, there is a need to respond to contemporary challenges in order that the BSP shall remain effective in its conduct of monetary policy and supervision of entities within the financial system,” he added. 

The Monetary Board will now be allowed to authorize, regulate and have examination powers on entities or persons engaged in money service businesses.

Aside from Escudero, the co-authors of the measure are Senate President Pro Tempore Ralph Recto, Minority Leader Franklin Drilon, and Sens. Joseph Victor Ejercito and Juan Edgardo Angara.