THE House of Representatives on Tuesday endorsed for Senate approval a measure increasing the Bangko Sentral ng Pilipinas (BSP) capitalization from P50 billion to P200 billion.
This, after 219 lawmakers voted to approve on third and final reading House Bill 7742, or “An Act Reinforcing the Corporate Viability of the BSP, Strengthening its Monetary and Financial Stability Functions and Enhancing its Regulatory Powers, Amending for the Purpose RA 7653 or the New Central Bank Act.”
The bill seeks to enhance the administration of the country’s monetary, credit and banking system.
It also aims to strengthen the supervisory, regulatory and examination powers of the BSP. To strengthen the Bangko Sentral’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.
Besides the additional capitalization, the measure seeks to restore the BSP’s tax-exempt status, especially on its governmental functions.
The amendments also include the grant to the BSP of authority to establish adequate loss allowances and reserve buffers for the BSP to better manage its operational risks.
The bill seeks to achieve and maintain monetary stability, important to preserve the purchasing power of the Filipinos and ensure the convertibility of the peso in goods or services, by authorizing the BSP to issue its own securities, as well as to obtain information from nonbank private sector.
The bill also removes the thresholds in the growth of monetary aggregates and credit as guiding principles in monetary administration.
Also, the measure provides legal protection for BSP officials and staff when performing official duties similar to that provided to officers and employees of the PDIC.
The measure will enhance credit operations by granting 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.
Earlier, Eastern Samar Rep. Ben Evardone, chairman of the House Committee on Banks and Financial Intermediaries, said that “In the last 25 years, the scale and complexity of the responsibilities of the Bangko Sentral has magnified by the growth of the Philippine economy and the expansion of its financial system. The capitalization of the Bangko Sentral which has stayed fixed at P50 billion is clearly inadequate to meet the requirements of a central bank in the midst of a growing economy and increasing complexity of the financial system.”
Evardone added, “In the last two decades since the enactment of its charter, the Bangko Sentral has witnessed significant changes to the banking and financial environment that necessitated, likewise, significant changes to its own operating landscape. These changes necessarily call for parallel changes in the Bangko Sentral Charter.”
He said the measure will “help transform the Bangko Sentral into a more effective and dynamic central monetary authority that can keep pace with the demands of its mandate.”