BSP Allows Exclusion of Clearing and Settlement Accounts from SBL Rule

To further promote the smooth functioning of financial markets and financial market infrastructures, the Bangko Sentral ng Pilipinas (BSP) approved as exclusion from the Single Borrower's Limit (SBL) the short-term exposures of banks and quasi-banks (QBs) to clearing and settlement banks arising from payment transactions.

Said exclusion was accorded as applying SBL to clearing and settlement accounts may impede financial market activities and fund transfers from one institution to another. 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.

To be eligible for exclusion, a clearing and settlement account shall be maintained with a designated local settlement bank, or a foreign settlement bank. Banks and QBs shall enter into a formal agreement with the settlement bank, stipulating that the account is opened and maintained exclusively for short-term payment transactions. Also, banks and QBs shall adopt internal control mechanism appropriate to these transactions, including proper segregation of accounts.

The adoption of this new policy is part of the BSP's initiatives to improve efficiency in payment and settlement transactions consistent with its financial stability objectives.

Source: Bangko Sentral ng Pilipinas (BSP)

Related posts