Restricted Transactions: Next Slide

Restricted Transactions
1. Lend, sell, transfer, or assign money or property to:

a. Any of the departments, directors, officers, stockholders, or
employees of the trust entity or fiduciary, including relatives within the
1st degree of consanguinity or affinity, or the related interests, of such
directors, officers and stockholders; or
b. Any corporation where the trustee or fiduciary owns at least 50% of
the subscribed capital or voting stock in its own right

2. Purchase or acquire property or debt instruments from:
a. Any of the departments, directors, officers, stockholders, or
employees of the trust entity or fiduciary, including relatives within the
1st degree of consanguinity or affinity, or the related interests, of such
directors, officers and stockholders; or
Next slide
3. Invest in equities of, or in securities underwritten by:

a. The trustee or fiduciary; or
4. Sell, transfer, assign, or lend money or property from one trust or

fiduciary account to another except where the investment is allowed by the
MB
Next slide
Prohibition on Commingling of Trust Properties

 The trust business and all funds, properties, or securities received by
any trust entity as executor, administrator, guardian, trustee, or
receiver or depositary shall kept separate and distinct from the
general business, including all other funds, properties, and assets, of
such trust entity.
Next Slide
Strikes And Lockouts of Bank Employees

Industry indispensable to the national interest
 Any strike or lockout involving bankism if unsettled after 7 days, shall
be reported by the BSP to the Secretary of Labor who has two
options:
1. He may assume jurisdiction over and decide the dispute, or
2. Certify the same to the National
 GBL, Sec. 22 allows the President of the Philippines to, at any time,
intervene and assume jurisdiction over such labor disputes in order to
settle or terminate the same.
Next Slide
Secrecy of Bank Deposits Law (R.A No. 1405)

Purposes
1. To encourage people to deposit in banking institutions
2. To discourage private hoarding so that banks may lend such funds
and assist in the economic development of the country (R.A No.
1405, Sec. 1).
Coverage (R.A No. 1405, Sec. 2)

 All deposits of whatever nature with banks or banking institutions in
the Philippines, as well as bonds issued by the Government of the
Philippines, its political subdivisions and instrumentalities.
 The phrase “of whatever nature” in Sec. 2 of said law proscribes any
restrictive interpretation of deposits.
 R.A No. 1405 not only applicable to money which are deposited but
also to those which are invested such as those placed under a trust
agreement.
Next Slide
Absolute Confidentiality (R.A No. 1405, Sec. 2)

 Deposits covered by law are considered as absolutely confidential in
nature and may not be examined, inquired or looked into by any
person, governmental official, bureau, or office
Next Slide
The New Central Banking Act (R.A. 7653)
1. State Policies and Creation of the Bangko Sentral ng

Pilipinas (BSP)
The Bangko Sentral ng Pilipinas (BSP) is the State’s Central Monetary

Authority mandated in the 1987 Philippine Constitution, which shall function
and operate as an independent and accountable body corporate in the
discharge of its mandated responsibilities concerning money, banking and
credit
-Next Slide-
2. Responsibility and Primary Objective Primary

Objectives:
a. To maintain price stability conducive to a balanced and

sustainable growth of the economy;
b. To promote and maintain the monetary stability and

convertibility of the peso;
c. To provide policy directions in areas of money, banking and

credit, with supervision over operations of banks and with regulatory
powers over operations of finance companies, and non-bank financial
institutions performing quasi- banking functions.
-Next Slide-
3. Administrative Functions of the BSP
a. Monetary or Financial Stability Functions
b. Supervisory Functions
4. Corporate Powers of the BSP
a. Power to enter into Contracts
b. Compromise, Condone, or release in whole or in part, any claim

of, or settled liability to the BSP, regardless of the amount involved,
under such terms and conditions as may be prescribed by the
Monetary Board.
c. Acquire and hold such assets and incur such liabilities in
connection with its operations or as are essential to the proper
conduct of such operation.
d. Lease, own, and sell or otherwise dispose of its real and personal
property.
e. To adopt, alter, and use a corporate seal which shall be judicially

noticed.
f. To do and perform other necessary or proper powers to carry out

the
purposes of Act5.
g. To sue and be sued.
-Next Slide-
Roles of BSP:
A. Banker of Government
The Act as a banker of the Government, its political subdivisions and

instrumentalities, and their cash balances should be deposited to the BSP,
with only minimum working balances to be held by government-owned
banks, and such other banks incorporated in the Philippines as the
Monetary Board may prescribe.
B. Representation with the International Monetary Board
To represent Government in all dealings, negotiations and transactions with

the IMF, and shall carry such accounts as may result from the Philippine
membership in or operations with the said Fund.
C. Representation with Other Financial Institutions
May represent the Government in dealings, negotiations or transactions

with the World Bank and with other foreign or international financial
institutions or agencies.
D. Fiscal Operations
Shall open a general cash account for the Treasurer of the Philippines, in
which the liquid funds of the Government shall be deposited, and with
transfer of funds to be made only upon the order of the Philippine Treasurer
(Villanueva, 2009).
-Next Slide-
Other Basic Functions of BSP:
1. It shall have the sole power and authority to issue currency

within the territory of the Republic of the Philippines;
2. The power to issue regulations to prevent the circulation of

foreign currencies, or currency substitutes as well as the
reproduction of facsimiles of BSP notes;
3. It has the power to investigate, make arrests, conduct

searches and seizure for the purpose of maintaining the integrity of
the currency;
4. To engage in foreign engage transactions in order to maintain

price stability;
-Next Slide-
5. To make rediscounts, discounts, loans and advances to

banking and other financial institutions to influence the volume of
credit consistent with the objectives of price stability;
6. To engage in open market operations, purchase and sale of

securities exclusively in accordance with its objectives of achieving
price stability;
7. To engage in marketing and stabilization of securities for the

account of the government;
8. To act as the financial advisor of the government; (Sundiang,

2006)
-Next Slide-
Composition of the Monetary Board:

There are 7 members who are appointed by the President of the Republic
of the Philippines. They are only appointed once.
a. Governor, as Chairman;
b. A member of the Cabinet designated by the President of the

Philippines;
c. Five (5) members who shall come from the sector, all of
whom shall serve full-time.
d. Term of 6 years
-Next Slide-
Qualifications of the Members of the Board:
1. Must be a natural-born citizens of the Philippines;
2. At least 35 years of age with the exception of the Governor, who

should at least be 40 years of age;
3. of good moral character,
4. of unquestionable integrity,
5. of known probity and patriotism.
6. With recognized competence in social and economic disciplines.
-Next Slide-
Disqualifications of the Members of the Board:
1. Person who has been connected with any multilateral banking or
financial institution.
2. Members coming from the private sector shall not hold any other
public office or employment during their tenure.
3. Disqualification imposed by RA. 6713.

4. Disqualified from being a Director, officer, employee, consultant,
lawyer, agent or stockholder of any bank, quasi bank or any other
institution subject to the supervision or examination by the BSP.
5. No member shall be employed in any such institution within two

years after the expiration of his term except when he serves as an
official representative of the Government to such institution.
6. Person who has substantial interest in any private bank in the

Philippines, within one year prior to his appointment.
-Next Slide-
Responsibility and liability of the members of the Monetary Board

1. Members of the Monetary Board, officials, examiners, and

employees of the Bangko Sentral who willfully violate RA 7653 or
who are guilty of negligence, abuses or acts of malfeasance or
misfeasance or fail to exercise extraordinary diligence in the
performance of his duties shall be held liable for any loss or injury
suffered by the Bangko Sentral or other banking institutions as a
result of such violation, negligence, abuse, malfeasance,
misfeasance or failure to exercise extraordinary diligence.
2. Similar responsibility shall apply to members, officers and

employees of the Bangko Sentral for;
a. The disclosure of any information of a confidential nature,

or any information on the discussions or resolutions of the
Monetary Board, or about the confidential operations of the
Bangko Sentral, unless the disclosure is in connection with the
performance of official functions with the Bangko Sentral, or is with
prior authorization of the Monetary Board or the Governor; or
b. The use of such information for personal gain or to the

detriment of the Government, the Bangko Sentral or third parties.
3. However, any data or information required to be submitted to

the President and/or Congress, or to be published under the
provisions of RA 7653 shall not be considered confidential.
-Next Slide-
Grounds for Removal of a Member of the Board:
The President may remove any member of the Board for any of the
following reasons:
a. Subsequent disqualification
b. Physical or mental incapacity that he cannot properly discharge his

duties and responsibilities and such incapacity has lasted for more
than 6 months.
c. Guilty of acts or operations which are of fraudulent or illegal character

or which are manifestly opposed to the aims and interests of the BSP;
d. No longer possessing qualifications specified in the Act.
-Next Slide-
Meetings
The Monetary Board shall meet at least once a week and the
presence of four members shall constitute a quorum. In all cases the
Governor of the BSP or his duly designated alternative shall be among the
4 members present. (New Central Banking Act, Sec 11)
Note: The Monetary Board may be called to a meeting by the Governor or

by 2 other members of the Board.Decisions of the Board shall require the
concurrence of at least 4 members. (New Central Banking Act, Sec 11)
-END-

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Restricted Transactions

1. Lend, sell, transfer, or assign money or property to:

3. Invest in equities of, or in securities underwritten by:

4. Sell, transfer, assign, or lend money or property from one trust or

Prohibition on Commingling of Trust Properties

Strikes And Lockouts of Bank Employees

Secrecy of Bank Deposits Law (R.A No. 1405)

Coverage (R.A No. 1405, Sec. 2)

Absolute Confidentiality (R.A No. 1405, Sec. 2)

1. State Policies and Creation of the Bangko Sentral ng

The Bangko Sentral ng Pilipinas (BSP) is the State’s Central Monetary

2. Responsibility and Primary Objective Primary

a. To maintain price stability conducive to a balanced and

b. To promote and maintain the monetary stability and

c. To provide policy directions in areas of money, banking and

3. Administrative Functions of the BSP

a. Monetary or Financial Stability Functions

4. Corporate Powers of the BSP

a. Power to enter into Contracts

b. Compromise, Condone, or release in whole or in part, any claim

e. To adopt, alter, and use a corporate seal which shall be judicially

f. To do and perform other necessary or proper powers to carry out

g. To sue and be sued.

The Act as a banker of the Government, its political subdivisions and

B. Representation with the International Monetary Board

To represent Government in all dealings, negotiations and transactions with

C. Representation with Other Financial Institutions

May represent the Government in dealings, negotiations or transactions

Other Basic Functions of BSP:

1. It shall have the sole power and authority to issue currency

2. The power to issue regulations to prevent the circulation of

3. It has the power to investigate, make arrests, conduct

4. To engage in foreign engage transactions in order to maintain

5. To make rediscounts, discounts, loans and advances to

6. To engage in open market operations, purchase and sale of

7. To engage in marketing and stabilization of securities for the

8. To act as the financial advisor of the government; (Sundiang,

Composition of the Monetary Board:

a. Governor, as Chairman;

b. A member of the Cabinet designated by the President of the

d. Term of 6 years

Qualifications of the Members of the Board:

1. Must be a natural-born citizens of the Philippines;

2. At least 35 years of age with the exception of the Governor, who

3. of good moral character,

4. of unquestionable integrity,

5. of known probity and patriotism.

6. With recognized competence in social and economic disciplines.

Disqualifications of the Members of the Board:

3. Disqualification imposed by RA. 6713.

5. No member shall be employed in any such institution within two

6. Person who has substantial interest in any private bank in the

1. Members of the Monetary Board, officials, examiners, and

2. Similar responsibility shall apply to members, officers and

a. The disclosure of any information of a confidential nature,

b. The use of such information for personal gain or to the

3. However, any data or information required to be submitted to

b. Physical or mental incapacity that he cannot properly discharge his

c. Guilty of acts or operations which are of fraudulent or illegal character