2. Cir. 730 (7.20.2011) - Updated Rules
Implementing the truth in Lending Act to
Enhance Loan Transaction Transparency
3. Objectives:
• Promote financial inclusion goals
• Intensify consumer protection-
transparency
• Facilitate healthy competition among FIs
and benefit the client as focus shifts on
services
4. Main features
Amendments to -
• Sec. X305 (Interests and Other Charges) –
Added Ss X305.5 Method of computing
interest - amortizations based on
outstanding balance
• Sec. X307 (Truth in Lending Act Disclosure
Requirements) - Changed definition of
Finance Charge and Simple Annual Rate
5. Main Features
• Ss X307.2 - Information to be Disclosed
• Ss X307.4 - Posters
• Appendix 19 - Format of DS on
Loan/Credit Transactions
6. Expectation:
• Compliance: 01 July 2012 – The BSP is not
inclined to extend the deadline
• RBAP info campaign – 8 March 2012
• BSP/MFSG Road-shows – April to June
2012
7. Cir. 746 (3 Feb. 2012)
3-Year Extension of Exemption of MSEs from
Submission of Add’l Doc. Requirements
(Amendment of Ss X304.1 of the MORB)
8. Main Feature:
•Loans to micro and small enterprises which are not
specifically exempted from the additional
documentary requirements specified under the third
paragraph of this Subsection shall be exempted from
said additional documentary requirement up to 31
December 2011.
EXTENDED TO 31 DECEMBER 2014
9. Cir. 747 (6 Feb. 2012)
Revised Compliance Framework for Banks
(Amendment to Sec. X180 of the MORB)
10. STATEMENT OF POLICY
•Promote safety and soundness of the
banking system
•Maintain high standards and accepted
practices of good corporate governance
•Put in place a robust, dynamically-
responsive and distinctly-appropriate
Compliance System
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11. Main Features
• Appointment of a Chief Compliance Officer (new)
– no more concurrent Internal Auditor
- “simple” banks may appoint a non-executive
director as concurrent CCO
• Focus of Compliance System on business risk
• Formal status w/in the organization
(renumbered)
• Basic elements of Compliance System
(renumbered)
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12. Main Features
• Responsibilities of BOD and SM
(renumbered)
• Outsourcing of risk assessment and
testing (renumbered)
• Role and responsibilities of Compliance
Function (deleted)
• For compliance on or before 1 July 2012
13. Cir. 748 (13 Feb. 2012)
Micro-Agri Loans
(Amendment of Ss X361.7 of the MORB)
14. Major Changes
Sec. 2 - Minimum Criteria for FI’s Capacity
1. To ensure financial capacity, managerial and
technical capabilities – should at ALL TIMES have -
• CAMELS of 3; Management of 3
• CAR of not less than 12%
• No major supervisory concern/not for PCA
• No arrearages on B/P (micro-finance) with
BSP/other creditors
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15. Minimum Criteria:
BREACH???
2. Given one examination cycle to correct; to
submit viable plan to rectify
3. If still non-compliant:
• Authority to offer micro-agri is suspended
• Transactions limited to collection of
outstanding receivables
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16. Other Changes:
•Amendment: Appropriate Risk Management
– (2) adequate management information and
loan tracking systems
•Addendum: Sec. 5 – Other Micro-Agri
Products
No inconsistent provision shall be allowed
unless with prior BSP approval; provided
additional risk is compensated by appropriate
RMS
17. Basic Product Characteristics
• Purpose/Term – Farm activities, agri-business/
short-term
• Eligibility – multiple income generating activities,
at least 2 years operating, good track of borrower
• Loan Amount – From small up to max of P150k
• Loan Value – Based on cash flow analysis
• Payment – Frequent amortization
• Security – collateral substitutes may be required
18. More Queries???
BSP Micro-Small & Medium Enterprise
Finance Specialist Group – Mr. Gerry
Butardo at TL (02) 7087701 Locals
2782 & 2340, DL (02) 7087397
19. Forbearance is NO LONGER acceptable
LET’S FIX IT !!!
BEFORE IT’S EVER TOO LATE !!!
