Bangko Sentral ng Pilipinas
Central Bank’s Regulatory Role
over NBFIs:
The Philippine Experience
Mr. Ricardo P. Lirio
Managing Director, SE II
FINANCIAL INSTITUTIONS UNDER BSP
SUPERVISION/REGULATION
As of March 31, 2002
Type of Financial Institution
Total
Head Office
Other Offices
7,587
4,326
1,342
1,919
925
44
100
781
6,662
4,282
1,242
1,138
9,687
5,243
4,444
A. With Quasi-Banking Functions
31
12
19
Investment Houses
Financing Companies
B. Without Quasi-Banking Functions
Investment Houses
Financing Companies
Investment Companies
Securities Dealers/Brokers
Lending Investors
Government NBFIs
Venture Capital Corporations
Non-Stock Savings and Loan
Associations
Pawnshops *
Credit Card Companies
III. Offshore Banking Units
17
14
9,656
30
50
9
26
9
2
9
117
9,397
7
12
7
5
5,231
26
40
9
26
9
2
9
85
5,018
7
11
10
9
4,425
4
10
I.
Banks
Commercial Banks
Thrift Banks
Rural and Cooperative Banks
II. Non-Bank Financial Institutions
*As of December 31, 2001
32
4,379
1
Bangko Sentral ng Pilipinas
Banks with NBFI Subsidiaries/Affiliates
Name of Bank
with QB
without QB
Invest. Financing Inv. Financing Securities Credit Venture Invest.
House Company House Company Dealers Card Capital Company
Bank of the Philippine Islands
1
2
2
Metrobank
2
1
2
1
2
1
Equitable-PCI Bank
Philippine National Bank
RCBC
1
1
3
2
1
1
1
2
1
1
1
1
1
1
1
1
1
Bangko Sentral ng Pilipinas
REGULATORY and SUPERVISORY
AUTHORITY
RA
7653
RA
8791
The New Central Bank Act
Supervision and examination of
banks and quasi-banks including
their subsidiaries and affiliates
engaged in allied activities
The General Banking Act 2000
Regulation of the organization
and operations of banks, trust
entities and for other purposes
Bangko Sentral ng Pilipinas
Banks
Demand
Deposits/
Checking
Accounts
Savings
Deposits
(Passboo
k)
Time
Certificat
e of
Deposits
Deposit
Instruments
NBFIs
Promisso
ry Notes
Repurchas
e
Agreement
Certificates
s
of
Participatio
n/Assignme
nt
Deposit-Substitute
Instruments
Bangko Sentral ng Pilipinas
Non-Bank Financial Institutions
With
Quasi-Banking
Function
Entity is borrowing from
20 or more persons or
entities
Without
Quasi-Banking
Function
Bangko Sentral ng Pilipinas
Issuance of deposit
substitutes or
borrowing
instruments by an
NBFI to 20 or more
persons or entities
irrespective of
outstanding
amounts is
considered
borrowing from
PUBLIC
Bangko Sentral ng Pilipinas
NBFIs Regulatory Framework
1970s
Development and growth of NBFIS
REQUIRED GOVERNMENT INTERVENTION
1971
Formation of Joint Central Bank of the
Philippines & IMF Banking Survey
Commission
NBFIs should be under the
authority of the Central Bank for
effective administration of credit
Bangko Sentral ng Pilipinas
1972
to
1974
Central Bank of the Philippines
required all NBFIs to register
1973
PAWNSHOPS placed
under regulatory
authority of CBP
granted exclusive
authority to all
INVESTMENT HOUSES
to underwrite
SECURITIES
PD 114 Pawnshop
Regulation Act
PD 129
Investment
Houses Law
Bangko Sentral ng Pilipinas
NBFIs Regulatory Framework
1982
1980s
Rules governing operations of NBFIs
were consolidated as Book IV of the
Manual of Regulations
Intensified competition among
financial institutions
Increased availability of long term
funds through direct and indirect
financing to increase stability of the
financial system
Bangko Sentral ng Pilipinas
1990s
Foreign Investments Act
1991
Full
liberalization
of foreign
exchange
Greater leeway and fewer
restrictions for foreign investors
1992
Unification of
2 Stock
Exchanges
Bangko Sentral ng Pilipinas
1990s
1993
Entry of foreign banks
1993
Entry of foreign
insurance firms
Bangko Sentral ng Pilipinas
1990s
1997
RA 8366
RA 8367
Increased
foreign equity
participation
and minimum
capitalization
for IHs
NSSLA ACT
Bangko Sentral ng Pilipinas
1997
INCREASED
CAPITALIZATION
Aids in ensuring strong solvency
positions and automatically weeds out
weak players in the industry
Bangko Sentral ng Pilipinas
1990s
1998
RA 8556
“FINANCING COMPANY ACT OF 1998”
An Act amending RA 5980, as Amended
Otherwise Known as the Financing Company
Act (1969)
Bangko Sentral ng Pilipinas
2000
Anti-Money Laundering Bill
Issuance of Circulars providing rules and
regulations to combat money-laundering
Bangko Sentral ng Pilipinas
NBFI
Quasi-Banks
Investment House
Financing Company
Trust Entities
Investment House
Financing Company
Other Trust Entities
Governing Law
RA 8791 - The General Banking Law
RA 7653 - The New Central Bank Act
Bangko Sentral ng Pilipinas
NBFI
Governing Law
Subsidiaries/Affiliates of a Bank/QB
RA 8791 - The General Banking Law
Investment House w/o QB
RA 7653 - The New Central Bank Act
Financing Company w/o QB
Investment Companies
Securities Dealers/Brokers
Lending Investors
Venture Capital Corporation
Enterprise Wholly or Majority Owned
by a Bank
Non-Financial Allied Undertaking
Non-Stock Savings and Loan Associations
Pawnshops
TIDCOR
SBGFC
Bangko Sentral ng Pilipinas
NBFI
Governing Law
Investment House
PD 129 The Investment Houses Law
Financing Company
RA 8556 Financing Company Act of 1988
Non-Stock Savings and Loan Associations RA 8367 Revised NSSLA Act of 1997
Pawnshops
TIDCOR
PD 114 Pawnshop Regulation Act
RA 8494 An act further amending
Presidential Decree #1080, as amended,
by reorganizing and renaming the
Philippine Export and Foreign Loan
Guarantee Corporation, expanding its
primary purpose
SBGFC
RA 6977 Magna Carta for SMEs
Bangko Sentral ng Pilipinas
Bangko Sentral ng Pilipinas
Central Bank’s Regulatory Role
over NBFIs:
The Philippine Experience
Mr. Ricardo P. Lirio
Managing Director, SE II