• BSP allows rural banks to invest in debt papers


    Smaller banks may now invest in debt papers without prior central bank approval, as long the bonds are not traded in the secondary market, according to a new circular issued by the Monetary Board.

    In circular dated May 4, the Monetary Board said it is “allowing rural and cooperative banks to invest in readily marketable bonds and other debt securities without prior Bangko Sentral approval subject to compliance with certain requirements.”

    The central bank policy-setting body said the bonds and other debt securities must also be issued in line with the new rules on registration of commercial papers.

    “In addition to said criteria, the investment shall not be held for trading purposes,” the Monetary Board emphasized.

    Before making an investment, banks must be pre-qualified by the central bank Supervision and Examination Sector in line with the Manual on Regulation for Banks.

    The In addition, the Circular said Banks must assess their own compliance with the pre-qualification requirements.

    Banks found to have violated the rules will be fined P1,000 a day until the violation is rectified.

    The new rules will take effect 15 days after having been published in a publication of general circulation.


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