Banking Laws:

New Central Bank Act

R.A. 7653
 ARTICLE I

CREATION,
RESPONSIBILITIES
AND CORPORATE
POWERS OF THE
BANGKO SENTRAL
DECLARATION
OF POLICY
The State shall maintain
a central monetary authority
that shall function and
operate as an independent
and accountable body
corporate in the discharge of
its mandated responsibilities
concerning money, banking
and credit system of the
country.
The BSP is a government-owned
corporation which enjoys fiscal and
administrative autonomy.
 RESPONSIBILITY AND PRIMARY
OBJECTIVES OF BSP:

• To maintain price stability conducive to a balanced and sustainable growth of

the economy.
• Promote and maintain the monetary stability and the convertibility of the
peso
• To provide policy directions in the areas of money, banking, and credit, with
supervision over the operations of banks and with regulatory powers over
the operations of finance companies and nonbank financial institutions
performing quasi-banking functions. (Sec. 3)
 ROLES OF BSP

• Designation as Banker of Government

• Representation with International Monetary Board
• Representation with Other Financial Institutions
• Fiscal Operations
 PRIVILEGES AND PROHIBITIONS

• Tax Exemption (Sec. 125)

• Exemption from Customs Duties (Sec. 126)
• Prohibitions (Sec. 128)
 MONETARY BOARD

Composed of seven (7) members appointed by the President of the

Philippines for a term of six (6) years:
• a) The Governor of the BSP, as Chairman;
• b) A member of the Cabinet designated by the President of the
Philippines;
• c) Five (5) members who shall come from the private sector, all of whom
shall serve full time.
* No member of the Board may be reappointed more than once. (Sec. 6)
 POWERS AND FUNCTIONS OF THE
MONETARY BOARD
In the exercise of its authority, the Monetary Board shall;
1. Issue rules and regulations it considers necessary for the discharge of the
responsibilities and exercise of its powers;
2. Direct the management operations and administration of the BSP;
3. Establish a human resource management system;
4. Indemnify its members and other officials of the BSP against all costs and
expenses reasonably incurred by such persons in connection with any civil or
criminal action
 QUALIFICATIONS OF MEMBERS OF
MONETARY BOARD
• Must be natural-born citizens of the Philippines
• At least 35 years of age, with the exception of the Governor, who
should at least be 40 years of age
• Of good moral character, of unquestionable integrity, of known
probity and patriotism
• With recognized competence in social and economic disciplines
(Sec. 8)
 POWERS & DUTIES OF THE
GOVERNOR
• The Governor or Chairman shall be the Chief Executive Officer of the BSP;
• He shall be the principal representative of the Monetary Board and of the BSP.
• The Governor shall execute and administer the policies and measures approved
by the Monetary Board;
• Should direct and supervise the operations and internal administration of the
Bangko Sentral
• He shall be head of a department and his appointment shall be subject to
confirmation by the Commission on Appointments (Sec. 17)
 REPRESENTATION OF THE MONETARY
BOARD AND THE BSP
• The Governor of Bangko Sentral is vested the responsibility of executing
and administering the policies and measures approved by the board and
empowered to: represent the Monetary Board and the BSP in all dealings;
• sign contracts entered into by the BSP, notes and securities issued by the BSP
all reports and statements, and other reports of the BSP;
• represents the BSP either personally or through counsel, as may be
authorized by the Monetary Board; and
• delegate his power to represent the BSP, to other officers upon his own
responsibility (Sec. 18)
 The BSP appoints a
Conservator, Receiver
or closure of the bank
in case of a distressed
bank
 Levels of Rehabilitation under
RA 7653 Sections 29-33

RECEIVERSHIP LIQUIDATION
CONSERVATORSHIP
CONSERVATORSHIP

One appointed if the

bank is in the state of
illiquidity or the bank
fails or refuses to
maintain a state of
liquidity adequate to
protect its depositors
and creditors
 The Monetary Board may appoint a conservator
with such powers as the Monetary Board shall deem
necessary to take charge of the assets, liabilities, and
the management thereof, reorganize the
management, collect all monies and debts due said
institution, and exercise all powers necessary to
restore its viability.
 POWERS OF A CONSERVATOR
1. Collect all monies and debts due to the said bank
2. To take charge of the assets, liabilities, and the management
thereof,
3. Reorganize the management
4. Such other powers as the Board deems necessary
5. Exercise such power to overrule or revoke the actions of the
previous management and board of directors of the bank
TERMINATION OF CONSERVATORSHIP

Conservatorship is terminated when the Monetary

Board is satisfied that the bank can operate on its own and
conservatorship is no longer necessary
RECEIVERSHIP

One appointed if the

bank is already insolvent
which means that its
liabilities are greater than its
assets.
The Court has no
authority to appoint a
receiver for a bank if the
latter will function as such
under BSP law.
The power to appoint
belongs to BSP.
 The receiver shall immediately gather and take charge of
all the assets and liabilities of the institution, administer the
same for the benefit of its creditors, and exercise the
general powers of a receiver under the Revised Rules of
Court but shall not, with the exception of administrative
expenditures, pay or commit any act that will involve the
transfer or disposition of any asset of the institution
 DUTIES OF A RECEIVER

The receiver shall:

• Immediately gather and take charge of all the assets and liabilities of the
institution
• Exercise the general powers of a receiver under Rules of Court
• Determine in not later than ninety (90) days from take over whether the
institution should be rehabilitated or may resume business with safety
For banks, the receiver would be the
Philippine Deposit Insurance Corporation;
for the quasi-banks, it would be any person
of recognized competence in banking or
finance
LIQUIDATION

Acts of liquidation are

those which constitute the
conversion of the assets of
the banking institution to
money or the sale,
assignment or the
disposition of for the
purpose of paying debts of
such institution
 In case of liquidation of a bank or quasi-bank,
after payment of the cost of proceedings, including
reasonable expenses and fees of the receiver to be
allowed by the court, the receiver shall pay the debts
of such institution
FILING OF THE CLAIMS AGAINST THE
INSOLVENT BANK
All claims against the insolvent bank should
be filed in the liquidation proceeding. It is not
necessary that a claim be initially disputed in a
court or agency before it is filed with the
liquidation court
THANK YOU!