Supervision of Financial Institution

• The Bangko Sentral ng Pilipinas (BSP) (or the Philippine Central Bank) is the central monetary authority in charge of regulating money, banking and credit in the Philippines
• BSP


  • It is an independent government-owned corporation with the primary responsibility of supervising and regulating finance companies bank operations, non-bank financial institutions performing quasi-banking functions, and other institutions performing similar functions
  • Its primary objective is to promote and preserve monetary stability and the convertibility of the national currency (Philippine peso)
• Functions of the BSP


  • Liquidity management
  • Currency issue
  • Lender of last resort
  • Financial supervision
  • Management of foreign currency reserves
  • Determination of exchange rate policy
• No person or entity shall engage in banking operations or quasi-banking functions in the Philippines without authority from the BSP
• Banking or quasi-banking activities regulated by the BSP

  • Maintaining adequate risk-based capital
  • Accepting demand deposits
  • Granting loans or credit accommodations
  • Issuing foreign letters of credit and pay/accept/negotiate import and export drafts/bills of exchange
  • Establishing a subsidiary, regional or operating headquarters, or local branch in the Philippines by a foreign bank
  • Selling or relocating banks, closing banks and conservatorships
  • Disclosing confidential information or credit data
  • Insuring deposits
  • Borrowing from the BSP or other agencies of the government
  • Foreign exchange transactions
  • Reporting requirements
  • Regulating virtual asset service providers
• Examination


  An investigation of an institution under the supervisory authority of the Bangko Sentral to determine whether the institution is operating on a safe and sound basis, inquire into its solvency and liquidity, and assess the effectiveness of its compliance function to ascertain that it is conducting business in accordance with laws and regulations
• Regular or periodic examination


  • Done once a year, with an interval of twelve (12) months from the last date thereof
  • Special examination may be conducted earlier, or at a shorter interval, when authorized by the Monetary Board (MB) by an affirmative vote of five (5) members
• Overseeing


  A limited investigation of an institution, or any investigation that is limited in scope, conducted to inquire into a particular area/aspect of an institution's operations, for the purpose of overseeing that laws and regulations are complied with, inquiring into the solvency and liquidity of the institution, enforcing prompt corrective action, or such other matters requiring immediate investigation
• Scope of examination


  • Appraisal of the overall quality of corporate governance
  • Assessment of the risk management system
  • Review of the institution's operations and overall risk profile
  • Evaluation of financial performance, capital adequacy, asset quality, and liquidity
  • Any other activity relevant to the above
• Conduct of examination


  • Includes interview of any bank's directors, officers and personnel
  • Verification, review and evaluation of documents and records, including making copies of the records, taking possession thereof and keeping them under the custody of the Bangko Sentral after giving proper receipts thereof
• Records


  Information, whether in its original form or otherwise, including documents, signatures, seals, texts, images, sounds, speeches, or data compiled, recorded or stored, as the case may be: (1) in written form on any material; (2) on film, negative, tape or other medium so as to be capable of being reproduced; or (3) by means of any recording device or process, computer or other electronic device or process; and regardless of whether these information are stored and kept by the Bangko Sentral supervised Financial Institution (BSFI) or another entity duly authorized by the BSFI (e.g., technology service provider)
• Refusal to permit examination is considered an act or omission that impedes, delays or obstructs the duly authorized Bangko Sentral examiner from conducting an examination of a BSFI, including the act of refusing to accept or honor the letter of authority to examine presented by the examiner of the Bangko Sentral
• A bank that willfully refuses to permit examination shall pay a fine of P30,000 per day from the day of the refusal and for as long as such refusal lasts, without prejudice to the sanctions under Section 34 of R.A. No. 7653