BSP Issues Multiple Updates for Financial Institutions in March 2022

Below are the key highlights of these recent updates from BSP:

• BSP is crafting rules that will allow covered banks and electronic money issuers to establish a digital marketplace whereby they can partner with financial service providers to develop and offer a wide array of financial products and services to consumers under a one-stop-shop platform. The financial products or services to be offered include retail loan products, other retail financial products, retail insurance products, collective investment schemes or pooled investment funds, and other financial products or services as may be authorized by the Monetary Board. 
• BSP approved the prudential reporting framework for Islamic banks and Islamic banking units. The reporting framework sets out the accounting treatment of common Islamic banking arrangements as well as guidelines on how selected accounts of Islamic banks and Islamic banking units will be mapped onto the financial statements for prudential reporting purposes. An observation period on the submission of the reports of Islamic banks and Islamic banking units will commence from the reporting period of end of June 2022 until December 31, 2023, with full implementation on March 31, 2024.
• ​BSP and the Alliance for Financial Inclusion jointly hosted the knowledge-exchange program, which examined the potential and impact of CBDC on financial inclusion and looked at the various design considerations and implementation challenges, including the underlying technology. The BSP Governor highlighted that, as a next step, BSP targets to roll-out in the near term, a pilot CBDC implementation called Project CBDCPh. The project aims to build organizational capacity and hands-on knowledge of key aspects of CBDC that are relevant for a use case around addressing frictions in the national payment system.
• BSP is developing a Financial Services Cyber Resilience Plan, which will serve as the primary framework for strategies to strengthen cyber resilience in the financial services industry. BSP is also developing the Advanced Supervisory Technology Engine for Risk-Based Compliance or ASTERisC that will streamline and automate regulatory supervision as well as reporting and compliance assessment of BSP supervised financial institutions cybersecurity risk management.
• BSP published a circular on amendments to the guidelines on the computation of minimum required capital and risk-based capital adequacy ratio. The key amendments are related to definition of capital, provisions on qualifying capital, regulatory adjustment to common equity tier 1 (CET1) capital, and credit risk-weighted assets. The circular shall take effect fifteen calendar days after its publication either in the Official Gazette or in a newspaper of general circulation.
• BSP published a circular on amendments to regulations on information technology risk management. The amendments incorporate requirements on the adoption of robust fraud management systems and reinforced consumer education and awareness programs to the Manual of Regulations for Banks (MORB) and the Manual of Regulations for non-bank financial institutions. These amendments aim to strengthen cybersecurity posture and minimize losses arising from fraud and cybercriminal activities. This circular shall take effect fifteen calendar days following its publication either in the Official Gazette or any newspaper of general circulation.

Related Links

• Press Release on Financial Inclusion
• Press Release on Digital Marketplace Model
• Press Release on Reporting Framework for Islamic Banks
• Circular on Reporting Guidelines for Islamic Banks
• Press Release on Knowledge Exchange Program on CBDC
• Circular on Amendments to the Guidelines on the Computation of Minimum Required Capital and Risk-Based Capital Adequacy Ratio
• Circular on Amendments to Regulations on Information Technology Risk Management
• Press Release on Cybersecurity 

Keywords: Asia Pacific, Philippines, Banking, Digital Marketplace, Islamic Banking, CBDC, Regulatory Capital, Basel, Reporting, Cyber Risk, Regtech, Suptech, Guidelines, BSP, Lending, Platform Businesses, Subheadline