AMENDING SUBSECTIONS X361.5 AND X361.7, MANUAL OF REGULATIONS FOR BANKS, ON THE GRANTING OF HOUSING MICROFINANCE AND MICRO-AGRI LOANS

National Administrative Register July 18, 2013 [ BSP CIRCULAR NO. 817, November 06, 2013 ]

Download PDF

Pursuant to Monetary Board Resolution No. 1202 dated 18 July 2013,
the provisions of the Manual of Regulations for Banks (MORB) on the
housing microfinance and micro-agri loans are hereby amended as follows:

Section 1. Subsection X361.5, MORB is hereby amended to read, as follows:

“Subsection X361.5 Housing microfinance loan.
The Bangko Sentral ng Pilipinas (BSP) adopts a holistic approach in
addressing social and economic objectives through microfinance. x x x

“x x x

“The following rules and regulations shall govern the GRANTING OF housing microfinance products:

“(1) Minimum criteria to determine bank’s capacity to GRANT housing microfinance – BANKS PLANNING TO GRANT HOUSING MICROFINANCE LOANS SHALL ENSURE THAT THE FOLLOWING REQUIREMENTS ARE COMPLIED:

“(a) The bank must have a track record of at least two (2) years x x x

“(b) The bank must have an appropriate housing microfinance product xxx
“(c) Appropriate verification of the following PRUDENTIAL REQUIREMENTS:

“x x x”

Section 2. Items “(4)” and “c.(1)” of Subsection
X361.5 are hereby deleted while items “c.”, “c.(2)”, “c.(3)”, “c.(e)”
are renamed as items “(4.)”, “(4.)(a)”, “(4.)(b)” and “(4.)(c)”,
respectively. The renamed item (4.) shall read as follows:

“x x x

“(4)

REGULATORY TREATMENT. THE
HOUSING MICROFINANCE PRODUCT WILL BE CONSIDERED AS A MICROFINANCE LOAN
AND WILL HAVE THE FOLLOWING INCENTIVES IN ADDITION TO EXISTING
INCENTIVES AVAILABLE FOR MICROFINANCE LOANS:

“(A)

The loans shall have an assigned risk-weight of fifty percent (50%) risk when not guaranteed x x x

“(B)

For housing microfinance loans secured by REM x x x

“(C)

Secure tenure instruments such as freehold xxx

“x x x

Section 3. To insert an additional item under
Subsec. X361.5, MORB, requiring the submission of a Certificate of
Compliance, attesting compliance with prescribed regulations, to wit:

“x x x

“(5)

NOTARIZED CERTIFICATE OF
COMPLIANCE. THE BANK PRESIDENT OR OFFICER OF EQUIVALENT RANK AND THE
COMPLIANCE OFFICER SHALL SUBMIT A NOTARIZED CERTIFICATE OF COMPLIANCE,
ATTESTING THAT THE BANK MEETS THE MINIMUM PRUDENTIAL REQUIREMENTS AND
THAT THE HOUSING MICROFINANCE LOAN COMPLIES WITH THE PRESCRIBED PRODUCT
CHARACTERISTICS/FEATURES. (ANNEX A)

“THE NOTARIZED CERTIFICATE SHALL BE
SUBMITTED WITHIN FIFTEEN (15) BANKING DAYS FROM THE DATE OF MEETING OF
THE BOARD OF DIRECTORS APPROVING THE HOUSING MICROFINANCE LOAN PRODUCT.”

Section 4. To insert an additional item under
Subsec. X361.5, MORB, enumerating the applicable sanctions in case of
non-compliance, to read as follows:

“x x x

“(6)
SANCTIONS.

“(A.)

IN CASE THE SUBMITTED
CERTIFICATE OF COMPLIANCE IS FOUND LATER, DURING ON-SITE EXAMINATION, TO
BE ERRONEOUS AND/OR UNTRUE, THE BANK MAY BE SANCTIONED UNDER SEC. 37 OF
R.A. NO. 7653 FOR WILLFUL MAKING OF A FALSE OR MISLEADING STATEMENT.

“(B.)

IN ADDITION TO THE
ABOVE-MENTIONED PENALTY, SUBJECT BANK IS NOT ALLOWED TO GRANT ANY NEW
HOUSING MICROFINANCE LOAN AND ITS TRANSACTION SHALL BE LIMITED ONLY TO
THE COLLECTION OF OUTSTANDING MICROFINANCE HOUSING LOAN RECEIVABLES.
THIS PROHIBITION SHALL REMAIN UNTIL BANK’S COMPLIANCE WITH THE
PRESCRIBED REGULATIONS ARE VERIFIED TO BE IN ORDER BY THE APPROPRIATE
EXAMINING DEPARTMENT/GROUP.

“(C.)

BANKS, WITH CERTIFICATES
OF COMPLIANCE, FOUND TO BE IN ORDER SHALL CONTINUE TO COMPLY WITH THE
PRESCRIBED PRUDENTIAL REQUIREMENTS. IF FOUND LATER ON THAT THE BANK IS
NON-COMPLIANT WITH ANY OR ALL OF THE REQUIREMENTS, IT SHALL BE GIVEN ONE
EXAMINATION-CYCLE TO CORRECT ANY DEFICIENCY. IF THE BANK REMAINS
NON-COMPLIANT AFTER THE LAPSE OF ONE EXAMINATION-CYCLE, THE GRANTING OF
HOUSING MICROFINANCE LOAN SHALL BE DEEMED SUSPENDED EFFECTIVE ON THE DAY
AFTER THE CORRECTIVE PERIOD HAS EXPIRED. WHILE THE SUSPENSION IS IN
EFFECT, THE BANK’S TRANSACTIONS SHALL BE LIMITED TO THE COLLECTIONS OF
OUTSTANDING HOUSING MICROFINANCE LOAN RECEIVABLES.

FOR THE PURPOSE OF THIS
PROVISION, ONE EXAMINATION-CYCLE IS DEFINED AS THE PERIOD COMMENCING
FROM THE DATE THE BANK IS FORMALLY INFORMED OF THE FINDINGS/EXCEPTIONS
OF THE LAST GENERAL EXAMINATION UP TO THE DATE OF THE EXIT CONFERENCE OF
THE IMMEDIATELY SUCCEEDING GENERAL EXAMINATION.

“(D.)

OTHER SANCTIONS. THE
IMPOSITION OF THE FOREGOING SANCTIONS SHALL BE WITHOUT PREJUDICE TO THE
IMPOSITION OF OTHER ADMINISTRATIVE SANCTIONS, AS PROVIDED IN OTHER
REGULATIONS IN THE MORB.”

Section 5. Subsection X361.7, MORB, as amended by Cir. No. 748, is hereby amended to read, as follows:

“Subsection X361.7 Micro-agri loans

“x x x

“Section 2. Minimum criteria to determine bank’s capacity to GRANT micro-agri loans. BANKS PLANNING TO GRANT MICRO-AGRI LOANS SHALL ENSURE THAT THE FOLLOWING REQUIREMENTS ARE COMPLIED:

“1.

To ensure that the banks have the financial capacity, managerial and technical capabilities x x x

“a)

CAMELS rating of at least ‘3’ and a ‘Management’ score x x x

“x x x

“2.

THE BANK MUST HAVE A TRACK
RECORD OF AT LEAST TWO YEARS IN IMPLEMENTING SUSTAINABLE MICROFINANCE
PROGRAMS, INCLUDING ACCEPTABLE PORTFOLIO-AT-RISK (PAR) LEVELS AS
EVALUATED AGAINST PREVAILING BSP STANDARDS; AND

“3.

THE BANK MUST HAVE
WELL-DEFINED POLICIES COVERING THE MICRO-AGRI LOAN PRODUCT TO BE
INCLUDED IN THE BANK’S MICROFINANCE MANUAL AS ONE OF THE TYPES OF
SERVICES OR PRODUCTS TO BE GRANTED TO PROSPECTIVE CLIENTS. LOAN/ACCOUNT
OFFICERS MUST BE TRAINED ABOUT THE MICRO-AGRI LOAN PRODUCT AND THAT THE
DETAILS OF THE PROGRAM CAN BE COMMUNICATED CLEARLY TO THE CLIENTS.

“x x x

“Section 6. Regulatory Treatment. THE MICRO-AGRI LOAN product will be considered as microfinance loan x x x”

Section 6. To insert an additional item under
Subsec. X361.7, MORB, requiring the submission of a Certificate of
Compliance, attesting compliance with prescribed regulations, to wit:

“SECTION 7. REPORTORIAL REQUIREMENT. NOTARIZED CERTIFICATE OF
COMPLIANCE. THE BANK PRESIDENT OR OFFICER OF EQUIVALENT RANK AND THE
COMPLIANCE OFFICER SHALL SUBMIT A NOTARIZED CERTIFICATE OF COMPLIANCE,
ATTESTING THAT THE BANK MEETS THE MINIMUM PRUDENTIAL REQUIREMENTS AND
THAT THE MICRO-AGRI LOAN COMPLIES WITH THE PRESCRIBED PRODUCT
CHARACTERISTICS/FEATURES. (ANNEX B)

“THE NOTARIZED CERTIFICATE SHALL BE SUBMITTED WITHIN FIFTEEN
(15) BANKING DAYS FROM THE DATE OF MEETING OF THE BOARD OF DIRECTORS
APPROVING THE MICRO-AGRI LOAN PRODUCT.”

Section 7. To insert an additional item under
Subsec. X361.7, MORB, enumerating the applicable sanctions in case of
non-compliance, to read as follows:

“SECTION 8. SANCTIONS. IN CASE OF NON-COMPLIANCE, THE BANK SHALL BE SUBJECT TO THE FOLLOWING:

“1.

IN CASE THE SUBMITTED
CERTIFICATE OF COMPLIANCE IS FOUND LATER, DURING ON-SITE EXAMINATION, TO
BE ERRONEOUS AND/OR UNTRUE, THE BANK MAY BE SANCTIONED UNDER SEC. 37 OF
R.A. NO. 7653 FOR WILLFUL MAKING OF A FALSE OR MISLEADING STATEMENT.

“2.

IN ADDITION TO THE ABOVE-MENTIONED
PENALTY, SUBJECT BANK IS NOT ALLOWED TO GRANT ANY NEW MICRO-AGRI LOAN
AND ITS TRANSACTION SHALL BE LIMITED ONLY TO THE COLLECTION OF
OUTSTANDING MICRO-AGRI LOAN RECEIVABLES. THIS PROHIBITION SHALL REMAIN
UNTIL BANK’S COMPLIANCE WITH THE PRESCRIBED REGULATIONS ARE VERIFIED TO
BE IN ORDER BY THE APPROPRIATE EXAMINING DEPARTMENT/GROUP.

“(C.)

BANKS, WITH CERTIFICATES OF COMPLIANCE,
FOUND TO BE IN ORDER SHALL CONTINUE TO COMPLY WITH THE PRESCRIBED
PRUDENTIAL REQUIREMENTS. IF FOUND LATER ON THAT THE BANK IS
NON-COMPLIANT WITH ANY OR ALL OF THE REQUIREMENTS, IT SHALL BE GIVEN ONE
EXAMINATION-CYCLE TO CORRECT ANY DEFICIENCY. IF THE BANK REMAINS
NON-COMPLIANT AFTER THE LAPSE OF ONE EXAMINATION-CYCLE, THE GRANTING OF
MICRO-AGRI LOAN SHALL BE DEEMED SUSPENDED EFFECTIVE ON THE DAY AFTER THE
EXIT CONFERENCE, DURING WHICH THE MANAGEMENT IS INFORMED OF ITS FAILURE
TO MAKE PROPER CORRECTIVE ACTIONS WITHIN THE PRESCRIBED PERIOD. WHILE
THE SUSPENSION IS IN EFFECT, THE BANK’S TRANSACTIONS SHALL BE LIMITED TO
THE COLLECTIONS OF OUTSTANDING MICRO-AGRI LOAN RECEIVABLES.

FOR THE PURPOSE OF THIS PROVISION, ONE
EXAMINATION-CYCLE IS DEFINED AS THE PERIOD COMMENCING FROM THE DATE THE
BANK IS FORMALLY INFORMED OF THE FINDINGS/EXCEPTIONS OF THE LAST GENERAL
EXAMINATION UP TO THE DATE OF THE EXIT CONFERENCE OF THE IMMEDIATELY
SUCCEEDING GENERAL EXAMINATION.

“(D.)

OTHER SANCTIONS. THE IMPOSITION OF THE
FOREGOING SANCTIONS SHALL BE WITHOUT PREJUDICE TO THE IMPOSITION OF
OTHER ADMINISTRATIVE SANCTIONS, AS PROVIDED IN OTHER REGULATIONS IN THE
MORB.”

Section 8. Effectivity. This Circular shall take
effect fifteen (15) calendar days following its publication either in
the Official Gazette or in a newspaper of general circulation.

FOR THE MONETARY BOARD:

(SGD) VICENTE S. AQUINO

Officer-in-Charge

“1.	IN CASE THE SUBMITTED CERTIFICATE OF COMPLIANCE IS FOUND LATER, DURING ON-SITE EXAMINATION, TO BE ERRONEOUS AND/OR UNTRUE, THE BANK MAY BE SANCTIONED UNDER SEC. 37 OF R.A. NO. 7653 FOR WILLFUL MAKING OF A FALSE OR MISLEADING STATEMENT.

“2.	IN ADDITION TO THE ABOVE-MENTIONED PENALTY, SUBJECT BANK IS NOT ALLOWED TO GRANT ANY NEW MICRO-AGRI LOAN AND ITS TRANSACTION SHALL BE LIMITED ONLY TO THE COLLECTION OF OUTSTANDING MICRO-AGRI LOAN RECEIVABLES. THIS PROHIBITION SHALL REMAIN UNTIL BANK’S COMPLIANCE WITH THE PRESCRIBED REGULATIONS ARE VERIFIED TO BE IN ORDER BY THE APPROPRIATE EXAMINING DEPARTMENT/GROUP.
“(C.)	BANKS, WITH CERTIFICATES OF COMPLIANCE, FOUND TO BE IN ORDER SHALL CONTINUE TO COMPLY WITH THE PRESCRIBED PRUDENTIAL REQUIREMENTS. IF FOUND LATER ON THAT THE BANK IS NON-COMPLIANT WITH ANY OR ALL OF THE REQUIREMENTS, IT SHALL BE GIVEN ONE EXAMINATION-CYCLE TO CORRECT ANY DEFICIENCY. IF THE BANK REMAINS NON-COMPLIANT AFTER THE LAPSE OF ONE EXAMINATION-CYCLE, THE GRANTING OF MICRO-AGRI LOAN SHALL BE DEEMED SUSPENDED EFFECTIVE ON THE DAY AFTER THE EXIT CONFERENCE, DURING WHICH THE MANAGEMENT IS INFORMED OF ITS FAILURE TO MAKE PROPER CORRECTIVE ACTIONS WITHIN THE PRESCRIBED PERIOD. WHILE THE SUSPENSION IS IN EFFECT, THE BANK’S TRANSACTIONS SHALL BE LIMITED TO THE COLLECTIONS OF OUTSTANDING MICRO-AGRI LOAN RECEIVABLES.
	FOR THE PURPOSE OF THIS PROVISION, ONE EXAMINATION-CYCLE IS DEFINED AS THE PERIOD COMMENCING FROM THE DATE THE BANK IS FORMALLY INFORMED OF THE FINDINGS/EXCEPTIONS OF THE LAST GENERAL EXAMINATION UP TO THE DATE OF THE EXIT CONFERENCE OF THE IMMEDIATELY SUCCEEDING GENERAL EXAMINATION.
“(D.)	OTHER SANCTIONS. THE IMPOSITION OF THE FOREGOING SANCTIONS SHALL BE WITHOUT PREJUDICE TO THE IMPOSITION OF OTHER ADMINISTRATIVE SANCTIONS, AS PROVIDED IN OTHER REGULATIONS IN THE MORB.”

“(4)	REGULATORY TREATMENT. THE HOUSING MICROFINANCE PRODUCT WILL BE CONSIDERED AS A MICROFINANCE LOAN AND WILL HAVE THE FOLLOWING INCENTIVES IN ADDITION TO EXISTING INCENTIVES AVAILABLE FOR MICROFINANCE LOANS:

	“(A)	The loans shall have an assigned risk-weight of fifty percent (50%) risk when not guaranteed x x x
	“(B)	For housing microfinance loans secured by REM x x x
	“(C)	Secure tenure instruments such as freehold xxx

	“x x x

“(5)	NOTARIZED CERTIFICATE OF COMPLIANCE. THE BANK PRESIDENT OR OFFICER OF EQUIVALENT RANK AND THE COMPLIANCE OFFICER SHALL SUBMIT A NOTARIZED CERTIFICATE OF COMPLIANCE, ATTESTING THAT THE BANK MEETS THE MINIMUM PRUDENTIAL REQUIREMENTS AND THAT THE HOUSING MICROFINANCE LOAN COMPLIES WITH THE PRESCRIBED PRODUCT CHARACTERISTICS/FEATURES. (ANNEX A)

	“THE NOTARIZED CERTIFICATE SHALL BE SUBMITTED WITHIN FIFTEEN (15) BANKING DAYS FROM THE DATE OF MEETING OF THE BOARD OF DIRECTORS APPROVING THE HOUSING MICROFINANCE LOAN PRODUCT.”

“(6)	SANCTIONS.

	“(A.)	IN CASE THE SUBMITTED CERTIFICATE OF COMPLIANCE IS FOUND LATER, DURING ON-SITE EXAMINATION, TO BE ERRONEOUS AND/OR UNTRUE, THE BANK MAY BE SANCTIONED UNDER SEC. 37 OF R.A. NO. 7653 FOR WILLFUL MAKING OF A FALSE OR MISLEADING STATEMENT.
	“(B.)	IN ADDITION TO THE ABOVE-MENTIONED PENALTY, SUBJECT BANK IS NOT ALLOWED TO GRANT ANY NEW HOUSING MICROFINANCE LOAN AND ITS TRANSACTION SHALL BE LIMITED ONLY TO THE COLLECTION OF OUTSTANDING MICROFINANCE HOUSING LOAN RECEIVABLES. THIS PROHIBITION SHALL REMAIN UNTIL BANK’S COMPLIANCE WITH THE PRESCRIBED REGULATIONS ARE VERIFIED TO BE IN ORDER BY THE APPROPRIATE EXAMINING DEPARTMENT/GROUP.

	“(C.)	BANKS, WITH CERTIFICATES OF COMPLIANCE, FOUND TO BE IN ORDER SHALL CONTINUE TO COMPLY WITH THE PRESCRIBED PRUDENTIAL REQUIREMENTS. IF FOUND LATER ON THAT THE BANK IS NON-COMPLIANT WITH ANY OR ALL OF THE REQUIREMENTS, IT SHALL BE GIVEN ONE EXAMINATION-CYCLE TO CORRECT ANY DEFICIENCY. IF THE BANK REMAINS NON-COMPLIANT AFTER THE LAPSE OF ONE EXAMINATION-CYCLE, THE GRANTING OF HOUSING MICROFINANCE LOAN SHALL BE DEEMED SUSPENDED EFFECTIVE ON THE DAY AFTER THE CORRECTIVE PERIOD HAS EXPIRED. WHILE THE SUSPENSION IS IN EFFECT, THE BANK’S TRANSACTIONS SHALL BE LIMITED TO THE COLLECTIONS OF OUTSTANDING HOUSING MICROFINANCE LOAN RECEIVABLES.

		FOR THE PURPOSE OF THIS PROVISION, ONE EXAMINATION-CYCLE IS DEFINED AS THE PERIOD COMMENCING FROM THE DATE THE BANK IS FORMALLY INFORMED OF THE FINDINGS/EXCEPTIONS OF THE LAST GENERAL EXAMINATION UP TO THE DATE OF THE EXIT CONFERENCE OF THE IMMEDIATELY SUCCEEDING GENERAL EXAMINATION.

	“(D.)	OTHER SANCTIONS. THE IMPOSITION OF THE FOREGOING SANCTIONS SHALL BE WITHOUT PREJUDICE TO THE IMPOSITION OF OTHER ADMINISTRATIVE SANCTIONS, AS PROVIDED IN OTHER REGULATIONS IN THE MORB.”

“1.	To ensure that the banks have the financial capacity, managerial and technical capabilities x x x

	“a)	CAMELS rating of at least ‘3’ and a ‘Management’ score x x x

	“x x x

“2.	THE BANK MUST HAVE A TRACK RECORD OF AT LEAST TWO YEARS IN IMPLEMENTING SUSTAINABLE MICROFINANCE PROGRAMS, INCLUDING ACCEPTABLE PORTFOLIO-AT-RISK (PAR) LEVELS AS EVALUATED AGAINST PREVAILING BSP STANDARDS; AND

“3.	THE BANK MUST HAVE WELL-DEFINED POLICIES COVERING THE MICRO-AGRI LOAN PRODUCT TO BE INCLUDED IN THE BANK’S MICROFINANCE MANUAL AS ONE OF THE TYPES OF SERVICES OR PRODUCTS TO BE GRANTED TO PROSPECTIVE CLIENTS. LOAN/ACCOUNT OFFICERS MUST BE TRAINED ABOUT THE MICRO-AGRI LOAN PRODUCT AND THAT THE DETAILS OF THE PROGRAM CAN BE COMMUNICATED CLEARLY TO THE CLIENTS.

More in National Administrative Register