COMMISSION ON AUDIT CIRCULAR NO. 79-114 September 11, 1979
TO
: All Heads of Ministries, Chiefs of Bureaus and Offices, Managing Heads of
Government-Owned or Controlled Corporations, Provincial Governors, City and
Municipal Mayors, All Auditors and Others Concerned.
SUBJECT : Central Bank Circular No. 673, Series of 1979 on Regulations Governing
Acceptance of Deposits and/or Borrowings from the Government.
For the information and guidance of all concerned, quoted hereunder is the full text of
Central Bank Circular No. 673, Series of 1979 on regulations governing acceptance of deposits
and/or borrowings from the government.
BANGKO SENTRAL NG PILIPINAS
(Central Bank of the Philippines)
Maynila, Pilipinas
OFFICE OF THE GOVERNOR
CIRCULAR NO. 673
Series of 1979
REGULATIONS GOVERNING ACCEPTANCE
BORROWINGS FROM THE GOVERNMENT
OF
DEPOSITS
AND
Pursuant to its Resolution No. 635 dated March 30, 1979, the Monetary
Board approved the following amendment, consolidation and reissuance of the
rules and regulations implementing Section 118 of Republic Act No. 265, as
amended.
SECTION 1. General rule. - Without the prior approval of the Monetary
Board, no private bank shall accept demand, Savings or time deposits from the
Government, its branches, political subdivisions or instrumentalities or from
Government-owned or controlled corporations, hereinafter referred to as
"Government and government entities". No private bank or non-bank financial
intermediary, whether or not performing quasi-banking functions, shall borrow
funds through the issuance or sale of its acceptances, notes or other evidences
of debt, from the Government and government entities.
SEC. 2. Banks which may be authorized to accept government
deposits/funds. - A private bank incorporated in the Philippines or any of its
branches, agencies or extension offices operating in municipalities or cities
where there are no existing branches, agencies or extension offices of the
Philippine National Bank (PNB), the Development Bank of the Philippines (DBP),
the Land Bank of the Philippines (LBP) or the Philippine Amanah Bank (PAB)
may, upon application, be authorized to accept deposits of the Government and
government entities: Provided, however, That the Philippine Veterans Bank
(PVB), a private bank which by its charter is a depository of government funds,
need not secure prior approval of the Monetary Board with respect to its
acceptance of deposits of, and/or borrowings from the Government and
government entities.
SEC. 3. Liquidity floor. - Unless otherwise provided by the Monetary
Board, private banks and non-bank financial intermediaries shall, in addition to
the required reserves against deposits and/or deposit substitutes, maintain a
thirty per cent (30%) liquidity floor with respect to deposits of, and/or borrowings
from, the Government and government entities in the form of Central Banksupported securities, separate and distinct from those used by them for other
specific purposes required by law/rules and regulations. PVB shall be subject to
such liquidity floor requirements as may be determined by the Monetary Board.
SEC. 4. Exempt transactions. - Compliance with the provisions of
Sections 1, 2 and 3 of this Circular is not required with respect to the following
deposits and/or borrowings:
a.
Deposits of, and/or borrowings from PNB, DBP, LBP and PAB;
b.
Deposits of the National Grains Authority (NGA) with banks incident to the
credit lines extended by them to NGA in connection with the financing of
its rice program;
c.
Marginal deposits on importations;
d.
Process of DBP bonds sold by DBP-accredited sales and services
agencies for the bond marketing operations of DBP;
e.
Funds received by private development banks as collecting agents of
DBP pursuant to Monetary Board Resolution No. 1223 dated June 30,
1972;
f.
Collections representing premium contributions to the Social Security
System: Provided, That funds thus collected shall be remitted to the
System within thirty (30) days from receipt thereof: Provided, further, That
such premium contributions shall not earn interest while in the custody of
the banks nor shall any service charge be collected thereon;
g.
National internal revenue taxes, customs and tariff duties and exportpremium duties collected by authorized agent banks;
h.
Deposits and/or borrowings from the Central Bank for purposes of
relending in connection with CB-administered funds;
i.
Proceeds of rediscounting, repurchase agreements and other credit
facilities with the Central Bank; and
j.
Any other form of deposits and/or borrowings specifically authorized by
law or exempted by the Monetary Board.
SEC. 5. Application for authority. - Private banks may file an application
for authority to accept deposits from the Government and government entities
with the appropriate supervising and examining department of the Central Bank,
stating among other particulars, the Government office or entity concerned, its
location, the type/s of deposits to be accepted and the amount thereof which
shall be limited primarily to the payroll requirements of said Government office or
entity. The letter of authority shall fix the terms and conditions for the acceptance
of such Government deposits. All existing authorities shall remain valid subject
to the conditions of the authority.
SEC. 6. Sanctions. - Any violation of this Circular shall be a ground for
the imposition of the following sanctions:
a.
The deposit account with the Central Bank of the bank concerned
shall be debited by the Accounting Department of the Central Bank
in the amount of the unauthorized deposit or borrowing upon receipt
of a report or notice from the appropriate supervising and examining
department of the Central Bank and the deposit account of the PNB
with the Central Bank shall be credited for the same amount. A
copy of said report or notice of the supervising and examining
department shall be furnished each to the bank concerned and the
PNB;
b.
Any bank with deficiency in the required liquidity floor against
deposits of, and/or borrowings from, the Government and
government entities or with excess holdings of such deposits shall
(1) be denied the credit facilities of the Central Bank; and (2) if the
deficiency lasts for four (4) consecutive weeks, the bank shall be
prohibited from declaring cash dividends and making new loans and
investments, except investments in government securities. The
prohibition shall be lifted by the Governor or the Senior Deputy
Governor upon certification by the appropriate supervising and
examining department that the bank has had no deficiency in its
liquidity floor and no excess holdings of government deposits for at
least four (4) consecutive weeks;
c.
In the case of non-bank financial intermediaries, the authority to
engage in quasi-banking functions by the entity concerned may be
suspended for a certain period of time as may be determined by the
Monetary Board, but in no case shall the period of suspension be
less than thirty (30) calendar days from receipt of advice to this
effect; and
d.
The withdrawal of
government funds.
previously
granted
authority
to
accept
The foregoing sanctions shall be without prejudice to the imposition of
other administrative sanctions prescribed under Section 34-A of Republic Act No.
265, as amended, and the penalties as prescribed under Section 34 of the same
Act.
SEC. 7 Repealing clause. - This Circular supersedes Circulars No. 163,
166, 175, 179 180, 189, 200, 205, 206, 220,231, 466, 481 and 488, and repeals
or modifies other regulations inconsistent herewith.
This Circular shall take effect immediately.
(SGD.) G. S. LICAROS
Governor
April 17, 1979
Heads of Auditing Units of the Commission on Audit are hereby instructed to see to it
that all deposits to and/or borrowings from, funds of the government including those of the
government-owned or controlled corporations and their subsidiaries are in accordance with the
above regulations.
(SGD.) FRANCISCO S. TANTUICO, JR., Acting Chairman