BSP streamlines bank licensing rules
Credit to Author: MAYVELIN U. CARABALLO, TMT| Date: Mon, 04 Feb 2019 18:01:52 +0000
Licensing rules for Bangko Sentral ng Pilipinas (BSP)-supervised financial institutions (BSFIs) have been streamlined in a bid to promote the ease of doing business in the country.
The central bank, in a statement on Monday, announced that revised guidelines had been approved by the policymaking Monetary Board.
“This is in line with the thrust of the Bangko Sentral to apply the risk-based approach to the licensing process and promote ease of doing business,” it added.
The guidelines classify licenses for special authorities into three: Types A, B and C.
“The requirements set out for each category are proportionate to the magnitude of risks that may arise from engaging in a specific activity and take into account the capability of the BSFI to manage the risks,” it added.
Activities covered by a Type A license include the establishment and sale of branches/branch-lite units (BLU), equity investments in allied and non-allied undertakings, and trust and other fiduciary business, among others, that are likely to expose the BSFI to increased risks.
With this, license applications will require compliance with three basic prudential criteria: a CAMELS rating of at least “3”; governance and independent control functions that meet what is considered appropriate for the BSFI, and compliance with BSP directives.
In addition to these criteria, a Type A license will also require prior central bank approval.
“These criteria are tied in with the Bangko Sentral’s supervisory assessment and enforcement actions to promote good governance and effective risk management systems,” the BSP said.
A Type B license, meanwhile, does not require compliance with the prudential criteria but is still subject to central bank approval.
Examples of activities covered by a Type B license include conversion to a lower bank category and amendment to articles of incorporation and by-laws, which are related to the primary banking license granted.
For this reason, the application will be evaluated regardless of the risk profile of the BSFI.
Finally, activities covered by a Type C license will no longer require prior Bangko Sentral approval since these largely involve business decisions made to manage operations.
“The BSFI only needs to notify the BSP that it intends to engage in Type C activities, which include, among others, relocation of approved but unopened branches/BLU, permanent closure and surrender of branch/BLU license and servicing of deposits outside bank premises,” the central bank said.
The new rules also set standard documentary requirements and a fee structure for all licensing applications.
The Monetary Board, the BSP said, decided to lift the special licensing fee for applications to establish branches/BLUs in cities previously considered as restricted areas.
“This is to encourage BSFIs to expand their branch network and consumer touch points and ultimately promote financial inclusion,” it added.
“The Bangko Sentral shall continue to align the requirements for other activities requiring special authorities with the new framework to promote efficiency and reduce business costs.”
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