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  • 2. Cir. 730 (7.20.2011) - Updated RulesImplementing 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 featuresAmendments 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 Addl Doc. Requirements (Amendment of Ss X304.1 of the MORB)
  • 8. Main Feature:Loans to micro and small enterprises which are notspecifically exempted from the additionaldocumentary requirements specified under the thirdparagraph of this Subsection shall be exempted fromsaid additional documentary requirement up to 31December 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 POLICYPromote safety and soundness of the banking systemMaintain high standards and accepted practices of good corporate governancePut in place a robust, dynamically- responsive and distinctly-appropriate Compliance System 10
  • 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) 11
  • 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 ChangesSec. 2 - Minimum Criteria for FIs Capacity1. 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 14
  • 15. Minimum Criteria:BREACH???2. Given one examination cycle to correct; to submit viable plan to rectify3. If still non-compliant: Authority to offer micro-agri is suspended Transactions limited to collection of outstanding receivables 15
  • 16. Other Changes:Amendment: Appropriate Risk Management (2) adequate management information andloan tracking systemsAddendum: Sec. 5 Other Micro-AgriProductsNo inconsistent provision shall be allowedunless with prior BSP approval; providedadditional risk is compensated by appropriateRMS
  • 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 LETS FIX IT !!! BEFORE ITS EVER TOO LATE !!!
  • 20. Thank You ! 20