Additional regulations for digital banks issued by BSP

Digital banks are required to heed prudential requirements and policies, such as those imposed on universal and commercial banks (U/KBs), given their classification as complex banks.

Under Bangko Sentral ng Pilipinas (BSP) Circular No. 1154 issued on Sept. 14, digital banks are required to have corporate governance framework, risk management system such as on information technology (IT) and cyber security, outsourcing, consumer protection and anti-money laundering (AML) and countering terrorist financing.

The additional rules were issued following its approval by the policy-making Monetary Board (MB) and the issuance of the digital bank framework in December 2020.

Digital banks are required to have a minimum capital of PHP1 billion.

The Circular said banks converting to digital banks shall be given a period of three years from approval of the MB within which to “meet the minimum capital requirement and implement the transition plan, including divestment or closure of branches, sub-branches or branch lite units.”

It said the three-year period wherein digital banks should meet the minimum capital requirement excludes funds being infused by new investors and transfer of the converting bank’s shares of stocks or similar arrangements.

The digital banks were required to have the needed capital before they were issued Certificate of Authority (COA), which is a requirement for registration with the Securities and Exchange Commission (SEC), it added.

The BSP has approved the operations of only six digital banks to date, a number deemed enough for now for the regulator to assess the importance and necessity for this new bank classification.

These banks are the GoTyme Bank Corporation, Maya Bank Inc. Overseas Filipino Bank (OFBank), Tonik Digital Bank Inc., UnionDigital Bank, and UNOBank, Inc.

In a statement Wednesday, BSP Governor Felipe Medalla said the central bank “remains committed to providing Filipinos with access to a range of innovative products and services supported by sound governance framework and secure and reliable digital infrastructure.”

This, as the digital financial ecosystem in the country starts to take shape, he said.

Medalla said “the prudential requirements for digital banks will strengthen the resilience of this new bank category to better absorb financial shocks and promote financial stability.”

“We are proud to take a leap forward towards a digital economy with the full operation of digital banks this year since this is seen to usher to a technology-driven and inclusive financial ecosystem that is resilient and capable of promoting a customer-centric banking experience,” he added. (PNA)

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