Article 141p. 141

COMMERCIAL LAWS NEGOTIABLE INSTRUMENTS, CORPORATION, INSURANCE, TRANSPORTATION, BANKING

preceding such holidays and non-banking days shall

apply on such days.

For the purpose of computing the reserve position of

each

bank or quasi-bank, its principal office in the

Philippines and all its branches and agencies located

therein shall be considered as a single unit.

SECTION 101. Reserve Deficiencies . — Whenever the

reserve position of any bank or quasi-bank, computed in

the manner specified in the preceding section of this Act,

is below the required minimum, the bank or quasi-bank

shall pay the Bangko Sentral one-tenth of one percent

(1/10 of 1%) per day on the amount of the deficiency or the

prevailing ninety-one-day treasury bill rate plus three

percentage

points,

whichever

is

higher:

Provided,

however , That banks and quasi-banks shall ordinarily be

permitted to offset any reserve deficiency occurring on

one or more days of the week with any excess reserves

which they may hold on other days of the same week and

shall be required to pay the penalty only on the average

daily deficiency during the week. In cases of abuse, the

Monetary Board may deny anybank or quasi-bank the

privilege of offsetting reserve deficiencies in the aforesaid

manner.

If

a

bank

or

quasi-bank

chronically

has

a

reserve

deficiency, the Monetary Board may limit or prohibit the

making of new loans or investments by the institution

and may require that part or all of the net profits of the

institution be assigned to surplus.

The Monetary Board may modify or set aside the reserve

deficiency penalties provided in this section, for part or

the entire period of a strike or lockout affecting a bank or

a quasi-bank as defined in the Labor Code, or of a

national emergency affecting operations of banks or

quasi-banks. The Monetary Board may also modify or set

aside

reserved

deficiency

penalties

for rehabilitation

program of a bank.

SECTION 102. Interbank Settlement . — The Bangko

Sentral shall establish facilities for interbank clearing

under such rules and regulations as the Monetary Board

may prescribe: Provided , That the Bangko Sentral may

charge administrative and other fees for the maintenance

of such facilities.

The deposit reserves maintained by the banks in the

Bangko Sentral in accordance with the provisions of

Section 94 of this Act shall serve as basis for the clearing

of checks and the settlement of interbank balances,

subject to such rules and regulations as the Monetary

Board

may

issue

with

respect

to

such

operations: Provided ,

That

any bank which incurs on

overdrawing in its deposit account with the Bangko

Sentral shall fully cover said overdraft, including interest

thereon at a rate equivalent to one-tenth of one percent

(1/10 of 1%) per day or the prevailing ninety-one-day

treasury bill rate plus three percentage points, whichever

is higher, not later than the next clearing day: Provided,

further , That settlement of clearing balances shall not be

effected

for

any

account

which

continues

to

be

overdrawn for five (5) consecutive banking days until such

time as the overdrawing is fully covered or otherwise

converted into an emergency loan or advance pursuant

to the provisions of Section 84 of this Act: Provided,

finally ,

That the appropriate clearing office shall be

officially

notified of banks with overdrawn balances.

Banks with existing overdrafts with the Bangko Sentral as

of the effectivity of this Act shall, within such period as

may be prescribed by the Monetary Board, either convert

the overdraft into an emergency loan or advance with a

plan of payment, or settle such overdrafts, and that, upon

failure to so comply herewith, the Bangko Sentral shall

take such action against the bank as may be warranted

under this Act.

SECTION 103. Exemption from Attachment and Other

Purposes . — Deposits maintained by banks with the

Bangko Sentral as part of their reserve requirements shall

be exempt from attachment, garnishments, or any other

order or process of any court, government agency or any

other administrative body issued to satisfy the claim of a

party

other

than

the

Government,

or

its

political

subdivisions or instrumentalities.

ARTICLE VIII Selective Regulation of Bank

Operations

SECTION 104. Guiding Principle . — The Monetary Board

shall use the powers granted to it under this Act to ensure

that the supply, availability and cost of money are in

accord with the needs of the Philippine economy and

that bank credit is not granted for speculative purposes

prejudicial to the national interests. Regulations on bank

operations shall be applied to all banks of the same

category uniformly and without discrimination.

SECTION 105. Margin Requirements Against Letters of

Credit . — The Monetary Board may at any time prescribe

minimum cash margins for the opening of letters of

credit, and may relate the size of the required margin to

the nature of the transaction to be financed.

SECTION 106. Required Security Against Bank Loans . —

In order to promote liquidity and solvency of the banking

system, the Monetary Board may issue such regulations

as it may deem necessary with respect to the maximum

permissible maturities of the loans and investments

which the banks may make, and the kind and amount of

security to be required against the various types of credit

operations of the banks.

SECTION

107.

Portfolio

Ceilings .

—

Whenever

the

Monetary Board considers it advisable to prevent or

check an expansion of bank credit, the Board may place

an upper limit on the amount of loans and investments

which the banks may hold, or may place a limit on the

rate of increase of such assets within specified periods of

time. The Monetary Board may apply such limits to the

loans

and

investments

of each bank or to specific

categories thereof.

In no case shall the Monetary Board establish limits

which are below the value of the loans or investments of

the banks on the date on which they are notified of such

restrictions. The restrictions shall be applied to all banks

uniformly and without discrimination.

SECTION 108. Minimum Capital Ratios . — The Monetary

Board may prescribe minimum ratios which the capital

and surplus of the banks must bear to the volume of their

assets, or to specific categories thereof, and may alter said

ratios whenever it deems necessary.

ARTICLE IX Coordination of Credit Policies by

Government Institutions

SECTION

109.

Coordination

of

Credit

Policies .

—

Government-owned corporations which perform banking

or credit functions shall coordinate their general credit

policies with those of the Monetary Board.

Toward this end, the Monetary Board may, whenever it

deems

it

expedient,

make

suggestions

or

recommendations to such corporations for the more

effective coordination of their policies with those of the

Bangko Sentral .

CHAPTER V Functions as Banker and Financial

Advisor of the Government

ARTICLE I Functions as Banker of the

Government

SECTION 110. Designation of Bangko Sentral as Banker

of the Government . — The Bangko Sentral shall act as a

banker of the Government, its political subdivisions and

instrumentalities.

SECTION

111.

Representation with the International

Monetary Fund . — The Bangko Sentral shall represent

the

Government

in

all

dealings,

negotiations

and

transactions with the International Monetary Fund and

© Compiled by RGL

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