The central bank of Philippines (BSP) issued Memorandum M-2023-004 setting out the timelines for submission of prudential reports, by banks, using the extensible mark-up language (XML) format through its Application Programming Interface (API). BSP also released the 2021 Countryside Bank Survey Baseline Report, which addresses the emerging policy issues on bank behavior toward lending with respect to the agriculture sector.
The memorandum on prudential reporting sets out information on migration to the API-based prudential report submission. The memo addresses aspects related to the connection to the BSP system, the submission of required reports, the digital certificate to identify the sender, and the compliance of the XML report format with the BSP reporting standards. The API would initially cover prudential reports including the financial reporting package, financial reporting package for trust institutions, report on microfinance products and income statement on retail microfinance operations, and report on compliance with the mandatory credit allocation. Additional prudential reports that are being submitted using other platforms would subsequently be scheduled for migration to the API-based submission; these reports include the Basel III leverage ratio, Basel III capital adequacy report, computation of the risk-based capital adequacy ratio covering combined credit, market and operational risks, minimum liquidity ratio, and others. Banks must complete the foregoing requirements in preparation for the live implementation of the API-based submission of prudential reports following the schedule below:
- Parallel run of the new financial reporting package (FRPv15), which shall be used for the API-based submission, shall cover the March 2023 quarter-end reports and the April and May 2023 month-end reports. The FRPv15 shall be submitted within 20 (for solo basis) and 35 (for consolidated basis) banking days from the end of the reference period.
- The existing financial reporting package (FRPv14.5) and related reports being submitted through the Financial Institutions Portal (FI Portal)/e-mail submission pursuant to existing submission guidelines shall continue to be considered as the official submission of banks for the March 2023 quarter-end and the April and May 2023 month-end reports.
- The Live submission of the FRPv15 shall start with the June 2023 quarter-end and July 2023 month-end reports. The FRPv14.5 and covered FRP-related reports shall no longer be submitted beginning the said periods.
- Banks may use the XML Converter Facility for submission of the FRPv15 subject to certain conditions. The first condition states that universal/commercial banks and digital banks and their subsidiary thrift and rural/cooperative banks may use the converter facility during the parallel run of the FRPv15. Beginning with the live implementation of the FRPv15 reports for the reporting period ending June 30, 2023, the BSP XML Converter Facility will no longer be available to universal/commercial banks and digital banks and their subsidiary thrift and rural/cooperative banks and, as such, they shall use their own XML facility and shall submit the same via the API facility. Second condition is that the submission of the generated XML report using machine-to-machine modality by universal/commercial banks, digital banks, and their subsidiary banks, for both the parallel run and live implementation, shall be done using the bank’s own process as coordinated with the BSP or via the approach introduced by the BSP using Postman protocol.
- Other thrift/rural/cooperative banks may use the BSP XML Converter and submit their XML reports via Web Auxiliary facility provided by the BSP during the parallel run and live implementation until further notice.
The Countryside Bank Survey Baseline Report discusses the results of the inaugural survey jointly conducted by the Department of Agriculture- Agricultural Credit Policy Council (DA-ACPC) and the BSP. This survey focuses on the banking units' agricultural lending experience in 2021 vis-a-vis 2020 while the next survey is expected to be in the second quarter of 2023. The survey had 1,904 respondent banks comprising 35% universal and commercial banks, 26% thrift banks, 27% rural and cooperative banks, and 12% government-owned banks. The survey looked into the practices and outcomes of various aspects of branch banking operations in 2021, including agricultural loan releases and demand, interest rates and other charges on bank loans, borrowers' repayment and debt position, bank risk management, bank profitability, problems encountered by banking units, effects of the COVID-19 pandemic on banking performance, and plans and prospects by banks for the next year. The Countryside Bank Survey highlights the following key findings:
- The share of agriculture to total loans granted in most banking units in 2021 ranged from 11% to 15% of total loans, which is lower compared to the 2020 level. Likewise, the number of agricultural borrowers served in 2021 was lower by at least 30% than in 2020.
- Across different types of banks, at least 26% and 36% from respondent banks of private rural and cooperative banks and government-owned banks, respectively, reported that their total agricultural borrowers were comprised of at least 76% small agricultural borrowers.
- Almost 47% of banking units indicated greater net incomes in 2021 than in 2020, while 34% generated lower profits. About half of the respondent banks claimed that the pandemic has negatively affected their profitability due to mobility restrictions thereby limiting bank operations particularly on loan collections, marketing of loan products, and other general daily transactions.
- In terms of the outlook, more than half of the respondents expect no change in lending and deposit rates while a third of the banking units anticipate higher lending rates.
- Two-third of the respondent banks confirmed that certain credit support mechanisms, such as credit guarantee or loan insurance, availability of information on potential borrowers, and agricultural/crop insurance, should be in place to encourage banking units to increase lending to the agriculture sector.
- Nearly 76% of bank branches in the survey plan to expand their lending to the agriculture sector in the next 12 months, with the majority of private thrift banks affirming plans to expand their agricultural loan portfolio.
Keywords: Asia Pacific, Philippines, Banking, XML, API, Prudential Reports, Basel, Capital Adequacy, NSFR, LCR, Reporting, Survey, Lending, BSP
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