BaNoxo SeNrneL No PILIPINAs
OFFICE OF THE GOVERNOR
ctRcuLAR NO. 994
Series of 2018
Subject: Amendments to the Manual of Regulations for Non-Bank Financial
Institutions applicable to Non-Stock Savings and Loan Associations
(MORNBFI-S) - Fund Investments
The Monetary Board, in its Resolution No. 20.A dated 5 January 20L8, approved
the amendments to the Manual of Regulations for Non-Bank Financial Institutions
applicable to Non-stock savings and Loan Association (MoRNBFI-S), as follows:
Section 1. Section 43915 is hereby amended to read as follows:
"section 43915 Fund Investments. Consistent with the policies under the
NSSLA Law (Republic Act No. 8357), NSSLAs shall primarily utilize the
accumulated savings of its members for loans to service household needs of
such members. However, temporary excess funds may be placed in safe and
liquid investment outlets pending their deployment to support core
operations. Excess funds generated from deposits and withdrawable capital
contributions which the NSSLAs are unable to utilize for prudent lending
activities may be returned to their contributing members at the discretion of
the Board of Trustees, provided that, the Association, thereafter, remains
compliant with the required capital-to-risk assets ratio and two percent (2%l
withdrawable share reserve on total capital contributions.
The responsibility for supervising the NSSLAs investment account rests solely
with the board of trustees. They have a fiduciary duty to the members and
depositors, and are charged with an implied trust to use funds only for
permitted purposes. They should ensure that risks in the investment
portfolio should be minimized to ensure that liquidity and marketability are
maintained. They must recognize that the investment account is primarily a
secondary reserve for liquidity rather than a vehicle to generate speculative
profits.
It is therefore imperative that the board of trustees adopt policies that
clearly define the investment strategy and provide guidance to management
on the direction and the level of risk the NSSLA is prepared to assume over
its investments. lt is through established objectives, strategies and policies
that the board can actively monitor the appropriateness of NSSLA's risk
profile and perform overall oversight function over its investment activities.
A.Mobini Sl.,Molote l0O4Monilq,Philippines . (6321708-7701 . www.bsp.gov.ph . bspmoil@bsp.gov.ph
A written investment policy duly approved by the Board shall contain at the
minimum, the following:
a. An explicit statement that outlines the investment objectives, which
shall be consistent with applicable law;
b. Types of permissible investments taking into consideration the safety
and liquidity of such investments;
c. Approval authorities (placement and termination) and corresponding
limits;
d. Concentration limits;
e. Procedures on monitoring the status of investments and the frequency
of reporting to the Board of Trustees;
f. Procedures to safekeep all relevant records and documents of the
investmenU and
g. Periodic review and updating of the investment policy.
An NSSLA may invest its funds in any or all of the following:
a. In sound non-speculative enterprises, as well as in bonds, securities, and
other obligations issued by the Government of the philippines, or any of
its political subdivisions, instrumentalities, or corporations including
government-owned or controlled corporations (hereinafter referred to
as the "Government"), subject to the following conditions:
(1) The credit needs of the members shail be served/satisfied firsu
(21 Investment other than those bonds, securities, and other
obligations issued by the Government should meet all of the
following criteria:
(a) safe. The value of the investment is protected and/or
guaranteed, i.e., the full amount invested can be collected
with certainty;
(b) Readily marketable. The security is quoted in an active market
and can readily be bought and sord. lt can readily be converted
into cash, or exchanged with ease in the market;
(c) High grade. The security must have the highest credit ratingl
given by a reputable credit rating agency recognized by
Bangko Sentra12; and
l with credit rating of "Aaa"
or its equivalent for long-term issuances and 1 (Best grade) or its equivalent for short-term
issuances.
2 The provisions
of subsections X931.6 and X932.1 of the Manual of Regulations for Banks (MoRB), shall apply
for purposes of
identifying reputable credit rating agencies recognized by Bangko Sentral.
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(d) Locally-issued. Peso-denominated and issued by corporations
created or organized in the Philippines under its laws; and
(3) The total aggregate amount of investment shall not exceed ten
percent (LO%I of the NSSLA's total assets. Investments in excess of
ten percent (LO%I shall require prior approval of the Bangko
Sentral.
Transitory Provision. NSSLAs with outstanding investments that: (1)
exceed the aggregate allowable limit except those previously authorized
by Bangko Sentral; and/or (2) are not compliant with any of the
conditions/provisions set forth above, shall be given ninety (90) days
from the effectivity of this Circular to propose an action plan duly
approved by the Board of Trustees to achieve full compliance.
The action plan, which is subject to monitoring by the Bangko Sentral,
shall provide for the details of the outstanding investments of the
NSSLAs with corresponding divestment timelines for those which are not
compliant with any of the conditions/provisions of this circular. Non-
compliance with the action plan without justifiable cause/reason shall
subject the Association and/or the responsible trustees/officers to
applicable sanction/s.
a. XXX
b. XXX."
Section 2. Effectivity. This Circular shall take effect fifteen (15) days following its
publication in the Official Gazette or in any newspaper of general circulation in the
Philippines.
For the Monetary Board:
[*"r^i PENILLA,
Gov rnor
J
Zt January 2018
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