Since 2000, the BSP has issued over fifty (50) policies and regulations that enable financial inclusion. These regulations are geared to (1) widen the range of inclusive financial products; (2) expand the physical network and virtual reach of financial services; (3) lower barriers to customer on-boarding; and (4) enhance financial consumer protection.
I. Microfinance Regulations
a. Microfinance Loan Regulations
- Circular 272 (January 2001) provides the operating guidelines of the General Banking Law Provisions specifically it recognizes cash-flow based lending as a peculiar feature of microfinance, defines microfinance loans and provides for the exemption of microfinance loans from rules and regulations issued with regard to unsecured loans
- Circular 364 (19 January 2003) reduces to 75% the risk weight applicable to small and medium enterprises (SMEs) and microfinance loan portfolios that meet prudential standards
- Circular 409 (14 October 2003) provides the rules and regulations for the portfolio-at-risk (PAR) and the corresponding allowance for probable losses which depend on the number of days of missed payment
b. Rediscounting for Microfinance Loans
- Circular 282 (19 April 2001) opens a rediscounting facility for rural banks/cooperative rural banks engaged in microfinance
- Circular 324 (2 March 2002) opens a rediscounting facility for thrift banks engaged in microfinance
c. Reporting Requirements for Microfinance Loans
- Circular Letter (2 October 2002) requires reporting of banks with microfinance operations
- Circular 607 (30 April 2008)
amends Circular Letter dated 2 October 2002 on the reportorial requirements of banks' microfinance loans
- Circular 836 (13 June 2014) amends the reportorial requirements on microfinance operations issued under Circular 607 and redefines “microfinance loans” and “small and medium enterprise loans” accounts under the Financial Reporting Package (FRP).
d. Documentary Requirements for Microfinance Loans Clients
- Circular 549 (09 October 2006) exempts microfinance from the required submission of additional documents (income tax return, financial statement) for the granting of loans
- Circular 746 (3 February 2012 ) –extendsup to31 December 2014 the exemption of microfinance from the required submission of additional documents (income tax return, financial statement) for the granting of loans
- Circular 855 (29 October 2014) extends the following loans from the submission of Income tax Return (ITR) and other supporting financial statements: microfinance loans; loans and other credit accommodations not exceeding Php 3 million; and loans to start up enterprise borrowers during their first 3 years of operations or banking relationship.
e. Microfinance Products
- Circular 678 (6 January 2010) provides rules and regulations that govern the approval of banks' housing microfinance products
- Circular 680 (03 February 2010) provides rules and regulations on the approval of banks' micro-agri loans
- Circular 683 (23 February 2010) provides rules and regulations in the marketing, sale and servicing of microinsurance products by banks
- Circular 744 (28 December 2011) defines microenterprise loan plus or “microfinance plus” which ranges from PhP 150,001- PhP 300,000 and caters to the growing business of microfinance clients.
- Circular 748 (13 February 2012) amends Circular 680 to enhance the rules and regulations on banks’ micro-agri loans
- Circular 782 (21 January 2013) amends the characteristics of a microfinance client to include among the types of clients those poor and low income clients with annual family income below the national average based from the latest available National Statistics Office (NSO) Family Income and Expenditure Survey (FIES)
- Circular 796 (3 May 2013) amends the general features of a microfinance savings deposit account by increasing the ceiling of average savings daily balance from PhP 15,000 to PhP 40,000
- Circular 817 (06 November 2013) amends the provisions of the MORB on the housing microfinance and micro-agri loans.
- Circular 841 (4 July 2014) amends the general features of a microinsurance product to reflect the provisions of the new Insurance Code. The amount of daily premium is increased to 7.5% from 5% of the current daily minimum wage for nonagricultural workers in Metro Manila, while the maximum amount of benefits is increased to 1,000 times from 500 times the current daily minimum wage for nonagricultural workers in Metro Manila.
- Circular 908 (14 March 2016) approves the adoption of the agricultural value chain financing framework as an effective and organized approach to channel financing to the agriculture and fisheries sectors and promote financial inclusion.
f. Governance of Microfinance Banks (Bank – NGO Relationship)
- Circular 725 (16 June 2011 ) provides the framework for governance arrangements and contractual agreements between a bank with microfinance operations and a related microfinance non-government organization/foundation
g. Microfinance Ratings
- Circular 685 (7 April 2010) –provides rules and regulations in the recognition of Microfinance Institution Rating Agencies
II. Liberalized Branching for Banks
- Circular 273 (27 February 2001) partial lifting of moratorium on establishment of new banks as long as the new banks are microfinance-oriented
- Circular 340 (30 July 2002) provides the rules and regulations concerning the establishment of branches or loan collection and disbursement points (LCDPs)
- Circular 365 (16 January 2003) liberalizes select provisions of Circular 340
- Circular 505 (22 December 2005) revises branching guidelines by allowing qualified microfinance oriented banks and microfinance oriented branches of regular banks to establish branches anywhere in the Philippines
- Circular 624 (13 October 2008) amends branching policy and guidelines that governs the establishment of branches, extension offices and other banking offices (OBOs)
- Circular 669 (22 October 2009) allows the servicing of limited withdrawals by microfinance/BMBE clients in LCDPs and OBOs of microfinance oriented banks/branches
- Circular 694 (14 October 2010) allows for the establishment of micro-banking offices and defines microfinance products
- Circular 727 (23 June 2011) amends the guidelines on branching and voluntary closure/sale/acquisition of branches/other banking offices
- Circular 728 (23 June 2011) allows for phased lifting of branching restriction in the eight (8) "restricted areas" of Metro Manila
- Circular 759 (30 May 2012) amends the branching policy and guidelines under the Manual of Regulations for Banks
- Circular 777 (13 December 2012) amends the subsection on the Manual of Regulations for Banks regarding the opening of approved but unopened branches
- Circular 783 (21 January 2013) amends the regulations on relocation and voluntary closure/sale of branches/OBOs.
- Circular 847 (28 August 2014) amends pertinent provisions of the MORB specifically on the application of special licensing fees on relocation of head offices, branches/OBOs and approved but unopened branches/OBOs to restricted areas.
- Circular 868 (26 January 2015) expands the range of services that can be delivered in MBOs and waives the collection of processing fee for banking offices that will be established in unbanked cities and municipalities.
- Circular 901 (29 January 2016) amends Sec. X151 of the MORB to capture the entire procedure in opening micro-deposits in MBOs, including the approval and actual opening of accounts and being able to make an initial deposit, subject to appropriate internal controls.
- Circular 929 (28 October 2016) amends Subsection X102.5 of the MORB to allow the conversion of microfinance-oriented thrift/ruraI banks/branches to regular banks/branches.
- Circular 940 (20 January 2017) allows banks to serve clients through cash agents which can accept and disburse cash on behalf of the bank. Cash agents can also perform Know-Your-Customer procedures as well as collect and forward application documents for loan and account opening. They may also sell and service insurance as may be authorized by the Insurance Commission. These cash agents are typically cash rich third party entities with many outlets that conduct regular business in fixed locations anywhere in the country, such as convenience stores, pharmacies and other highly accessible retail outlets.
III. E-Money Issuance Regulations
- Circular 649 (09 March 2009) provides the guidelines governing the issuance of electronic money (e-money) and the operations of electronic money issuers (EMI) in the Philippines
- Circular 704 (22 December 2010) provides the guidelines on outsourcing of services by Electronic Money Issuers (EMIs) to Electronic Money Network Service Providers (EMNSP)
IV. Pawnshops and Money Service Business Regulations
- Circular 938 (23 December 2016) enhances existing regulations on pawnshops to ensure these entities are properly supervised for their effective compliance with AML and internal control rules and guidelines. Pawnshop operators are also now subject to stricter fit and proper rules and standards of corporate governance as applicable.
- Circular 942 (20 January 2017 2017) introduces the concept of Remittance and Transfer Companies (RTCs) which refer to any entity that provides Money or Value Transfer Services (MVTS) such as Remittance Agents, Remittance Platform Providers, and E-money Issuers; introduces a network-based approach to regulation wherein the entity that operates a remittance business shall be held responsible for the operation of its remittance network and accreditation of its Remittance Sub-agents (RSAs); amends the requirements for registration and adopting a classification of MSBs based on benchmark capital, among others.
V. Financial Technology (FinTech)/ Digital Finance Ecosystem
- Circular 808 (22 August 2013) provides the guidelines on information technology risk management for all banks and other BSP-supervised institutions
- Circular 944 (6 February 2017) regulates entities that use virtual currency as the underlying instrument for remittance. Regulating virtual currency entities signifies the BSP’s acknowledgement of virtual currency as an innovative instrument that can facilitate the speed and affordability of remittance and payment transactions.
- Circular 949 (15 March 2017) provides guidelines on social media risk management that advocate responsible use of social media by BSP Supervised Financial Institutions (BSFIs), recognizing that social media presents vast potential benefits and opportunities for greater economic advancement and financial inclusion.
VI. Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT)
- Circular 608 (20 May 2008) revises the rules on acceptable identification cards which lessened the requirement to 1 valid identification card (from previous required 2 IDs) and widened the range of acceptable IDs
- Circular 706 (05 January 2011) provides updated anti-money laundering rules that recognizes the importance of financial inclusion
- Circular 792 (03 May 2013) amends the list of valid IDs for financial transactions
- Circular 950 (15 March 2017) allows covered institutions to implement reduced Know-Your-Customer (KYC) rules for certain low-risk accounts and use technology for face-to-face contact requirements.
VII. Financial Consumer Protection
- Circular 730 (20 July 2011) provides enhanced rules to implement the Truth in Lending Act to enhance transparency in loan transactions of all banks
- Circular 754 (17 April 2012) provides enhanced rules to implement the Truth in Lending Act to enhance transparency in loan transactions of all non-bank financial institutions under BSP supervision
- Circular 755 (20 April 2012) provides enhanced rules to implement the Truth in Lending Act to enhance transparency in loan transactions of all credit granting institutions under other regulators like the Securities and Exchange Commission, Insurance Commission and Cooperative Development Authority
- Circular 857 (21 November 2014) institutionalizes consumer protection as an integral component of banking supervision in the country. The Framework covers standards on disclosure and transparency, fair treatment, privacy of client information, financial education and effective recourse. It underscores that financial consumer protection is a collective responsibility and shared accountability among financial institutions, the BSP and the financial consumers.
VIII. Mandatory Credit to Marginalized Sectors
- Circular 374 (11 March 2003) guidelines for the implementation of the Barangay Micro-Business Enterprise Law
- Circular 570 (24 May 2007) allows wholesale loans of universal, commercial and branches of foreign banks to non-bank microfinance institutions as compliance to the 6% mandatory credit allocation to small enterprises
- Circular 625 (14 October 2008) provides rules and regulations that govern the mandatory allocation of credit resources to micro, small and medium enterprises
- Circular 736 (20 July 2011) provides rules and regulations on the mandatory credit allocation for agriculture and agrarian reform credit
Actual text of the above Circulars may be downloaded from the Microfinance page of the BSP website: www.bsp.gov.ph/about/advocacies_micro_circ.asp
Other BSP issuances not on this website may be searched and downloaded from the Regulations page of the BSP website: www.bsp.gov.ph/regulations/regulations.asp
For more information on microfinance and financial inclusion initiatives of the BSP, kindly download the Yearend Reports on this website: www.bsp.gov.ph/about/advocacies_micro.asp