The Bangko Sentral ng Pilipinas (BSP) has removed from the lending cap banks’ and quasi-banks’ short-term payment exposures to clearing and settlement accounts.
In a statement Friday, the BSP said applying the single borrowers’ limit (SBL) to “clearing and settlement accounts may impede financial market activities and fund transfers from one institution to another.”
The SBL puts a cap on a bank’s credit exposure to one group to minimize risks.
“Moreover, the distinct nature of clearing and settlement accounts as mere ‘pass through’ for short-term payment transactions entails relatively low credit exposure to the clearing and settlement bank,” the BSP noted.
BUSINESS
BUSINESS
BUSINESS
According to the BSP, a clearing and settlement account must be maintained with a designated local or foreign settlement bank in order to be eligible for the exclusion.
Also, banks and quasi-banks should sign a formal agreement with the settlement bank wherein they must stipulate that the account was opened and will be maintained exclusively for those short-term payments.
