Bangko Sentral Further Eases Forex Regulations in the Philippines

The central bank of Philippines, the Bangko Sentral ng Pilipinas (BSP) has further eased the foreign exchange rules in a bid encourage the entry of foreign banks into the country. Amendments to the Manual of Rules on Foreign Exchange Transactions have been made to make it correspond with provisions of the Act Allowing the Full Entry of Foreign Banks in the Philippines.

BSP Governor Amando Tetangco Jr. said that the new rules now require the funding towards foreign banks’ permanently assigned capital be remitted inwardly and be converted to pesos at applicable exchange rate.

Additionally definitions of specific terms like unimpaired capital of a local bank, unimpaired capital of foreign bank subsidiaries or bank branches have also been modified to reflect the changed policies.

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In a statement, Tetangco said

The continuing review of foreign exchange regulations is consistent with the BSP’s commitment to maintain a safe and sound financial system, a stable forex market, and an appropriate monetary policy

As of now nine banks have received approval to operate in the country. These are: Japanese bank Sumitomo Mitsui Banking Corp, United Overseas Bank Ltd from Singapore, three banks from South Korea – Industrial Bank of Korea, Shinhan Bank and Woori Bank, and finally four from Taiwan – First Commercial Bank, Cathay United Bank, Yuanta Commercial Bank Co. Ltd and Hua Nan Bank.

Last year an agreement was signed to allow three Malaysian banks to enter the market. Tetangco had said then that similar discussions were ongoing with Thailand and Indonesia as well. The bill to allow more foreign banks into the country was signed by the former president Benigno Aquino III in 2014. The amendment increased the number of overseas banks that could operate in the country as the earlier law allowed only 10 foreign banks.

The new law also allows banks to have 100 percent control of local banks replacing the earlier limit of 60 percent. The BSP has additionally been trying to relax the regulatory requirements with regard to sending money overseas in an effort to attract depositors.

Under earlier easing measures Philippine residents were allowed to buy up to $500,000 in foreign exchange without supporting documents. The change in cap was a sharp increase over the original $120,000 limit. Those travelling could also deposit the foreign exchange purchased by them from banks for use abroad. The deposits however would need to be placed in foreign currency deposit unit accounts.

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