Posted on Monday, May 09, 2005

New ATM plan runs into legal roadblocks

By Robert JA Basilio Jr., Subeditor

First of two parts

BY September, automated tel- ler machines will no longer run out of money.

Using its per­sonnel and fleet of armored cars, the privately-run cash manage­ment center (CMC) will be on hand to service any ATM in Metro Manila, rain or shine, 24 hours a day, seven days a week.

However, these services will not incur any additional costs for banks.

Instead, the CMC will help banks cut them.

Or at least that’s what the operators of the CMC would have the banks—and their customers—believe.

Banks, for one thing, will no longer need to lease nor own armored vehicles to bring cash to and from their ATMs and corporate customers, such as fast-food chain branches.

On the other hand, such savings come at a price.

According to Leonilo G. Coronel, Bankers Association of the Philippines (BAP) executive director, the Philippine Clearing House Corp. (PCHC)—the firm running the CMC—will have to charge banks for such cash management services.

While the CMC’s service fee structure has yet to be finalized, some of the CMC’s services rendered free of charge by the cash department of the Bangko Sentral ng Pilipinas (BSP).

Besides collecting deposits, the CMC will classi­fy collected cash into fit or unfit notes (torn or mutilated bills), store money—esti­mated to reach billions—in its own vault, and allow banks’ to withdraw from it.

This much was indicated by a July 2003 agreement between the BSP and the PCHC.

Unfortunately, various func­tions of the cash center as enumerated earlier are in conflict with Republic Act 7653, or the New Central Bank Act, the very law which created the BSP.

Initially proposed to the BSP by the BAP in May 1998, the very concept of a cash management center itself encountered opposition from the Commission on Audit owing to various issues, regulatory and otherwise.

But despite the opposition, the project pushed through.

In November 2004 the BSP and the PCHC held ground­breaking ceremonies for a P152-million building, which will house the CMC.

But questions about the cash center remain.

A COA document shown to The Manila Times indicates that the creation of the CMC requires the consent of Congress since the BSP is a creation of law.

Moreover, the CMC’s functions are functions that are, by law, solely reserved for the BSP’s cash department (CD), according to a Times source who is familiar with the BSP’s CD operations.

This, in turn, may explain why in the last quarter of 2004, an audit observation memo­ran­dum (AOM) was issued by the COA to the BSP, requesting clarification regarding the CMC.

While the BSP already submitted a rejoinder to the AOM, Supervising Auditor Angelina Villanueva has reserved comment until the COA releases its report about the project this April. As of this writing, the report has yet to be released.

Meanwhile in a Times interview, BSP Comptroller Eve­lyna C. Avila said that these and many other issues raised by the COA can be easily cleared up, without exactly indicating when these issues would be resolved.

When asked what exactly these issues are, she instructed The Times to ask the COA.

But when The Times requested COA’s director, Tito S. Nabua, and Villanueva, neither one, in their letters to The Times, was willing to discuss the CMC, let alone agree to be interviewed.

Nevertheless, Avila maintains that the BSP is the country’s central monetary authority.

“We have the best counsels, we consult with the markets, and we cannot do anything that is basically or fundamentally wrong,” Avila said.

But then again, before Avila joined the BSP, she was a member of the BAP’s CMC task force and may have helped push the cash center project’s approval.

(To be continued)  

Part 2 |