Bangko Sentral ng Pilipinas approved further amendments to the foreign exchange rules to align with the provisions of the law allowing the entry of foreign banks in the country.
Bangko Sentral Governor Amando Tetangco Jr. said in a news briefing Wednesday the approved policy changes mainly involved the inclusion of an express provision that the foreign exchange funding for permanently assigned capital of foreign bank branches should be inwardly remitted and converted to pesos at the exchange rate prevailing at the time of remittance.
“The continuing review of FX regulations is consistent with Bangko Sentral’s commitment to maintain a safe and sound financial system, a stable foreign exchange market, and an appropriate monetary policy, and applicable laws,” Tetangco said.
He said this was pursuant to the pertinent provisions of the Manual of Regulations for Banks.
Included in the policy changes is the revision of the definitions of “unimpaired capital of a local bank,” “unimpaired capital of foreign bank branches” and “unimpaired capital of foreign bank subsidiaries.”
Republic Act 10641 further liberalized the domestic banking industry and allowed the entry of foreign banks in the country in July 2014. Since the early part of 2015, the policy-setting Monetary Board approved the entry of nine Asian banks in the Philippines.
These banks include Hua Nan Commercial Bank Ltd. of Taiwan, South Korea’s Woori Bank, First Commercial Bank of Taiwan, United Overseas Bank Ltd. of Singapore, Yuanta Commercial Bank Co. Ltd. of Taiwan, Industrial Bank of Korea, Shinhan Bank of Korea, the Japan-based Sumitomo Mitsui Banking Corp. and the Taiwan-based Cathay United Bank.
Under Republic Act 10641, foreign banks are allowed to control up to a combined 40 percent of the total assets of the banking system. This was 10 percentage points higher than the previous 30-percent limit.
Foreign banks can now apply to operate in the Philippines either as a branch or as a wholly-owned subsidiary. RA 10641 amended RA 7721, which was passed into law in May 1994.
Meanwhile, the Monetary Board announced the adoption of new supervisory framework for pawnshops in recognition of the industry’s vital role in building a more inclusive financial system and protection of financial consumers.
Under the new rules, Bangko Sentral will put high regard on the fitness and propriety of pawnshop operators and its officials by focusing on their integrity, market reputation, competence and financial capacity.
Pawnshop operators are also mandated to disclose to their customers the effective interest rate of the loan, including the charges in the transaction, and the policy on insurance of pawned items, maturity date, and grace period in case when the customer failed to redeem the loan.
COMMENT DISCLAIMER: Reader comments posted on this Web site are not in any way endorsed by Manila Standard. Comments are views by manilastandard.net readers who exercise their right to free expression and they do not necessarily represent or reflect the position or viewpoint of manilastandard.net. While reserving this publication’s right to delete comments that are deemed offensive, indecent or inconsistent with Manila Standard editorial standards, Manila Standard may not be held liable for any false information posted by readers in this comments section.