CONSLA Questions BSP Circular No. 789

The survival and stability of NSSLA is greatly affected by the policy directions
and implementations of the Bangko Sentral ng Pilipinas (BSP) and the Bureau of
Internal Revenue (BIR). To cite some of those policies: the BSP issued Circular 789 in
2013 restricting the frequency of dividend distribution to members to once a year
only and more than doubled the required Allowance for Probable Loan Losses which
caused lower dividends to members of majority of the NSSLAs while the others were
totally not able to distribute dividends causing financial dislocation of concerned
members.
Meralco Employees Savings and Loan Association, Inc. added 2 new photos.
September 29, 2015

TO: ALL MEMBERS
DATE: 23 September 2015
SUBJECT: PROPOSED BSP CIRCULARS & AMENDMENTS
Previously, the Bangko Sentral ng Pilipinas (BSP) released Circular 789 directing all Non-Stock
Savings and Loan Associations (NSSLAs) to comply with the following directives:
1. Distribute net income (dividend payment) to members only ONCE per calendar/fiscal
year at the end of such fiscal year.
2. Classify members capital contribution into Fixed/Non-withdrawabIe and Withdrawable
Capital Contribution.
These regulatory mandates will definitely impact heavily on our members especially the retirees
but please understand that we have to comply. The BSP is tightening its rules but these are all
intended to protect the members and the viability of the Savings and Loans Associations like
MESALA.
We will continue to keep you updated on developments on the regulatory front in order that you
may manage to mitigate any negative impact that such regulation may bring. In line with this,
we are furnishing you herewith a list of the PROPOSED Circulars and Amendments recently iss
ued by the BSP, currently being circulated for comments and scheduled for discussion with the
BSP-CONSLA Technical Working Group consisting of BSP representatives and members of
Confederation of Non-Stock Savings and Loan Association, Inc. (CONSLA, Inc.), the umbrella
group of all NSSLAs in the Philippines.
Rest assured that the Board of Trustees and Management of your Association, in close
coordination with CONSLA, Inc., are carefully evaluating these proposed Circulars and
Amendments to establish a common ground among NSSLAs and actively cooperating with the
BSP with the common objective of further strengthening the NSSLA sector and to protect our
interests.
(Atty.) Gil S. San Diego
Chairman of the Board
Solon calls for amendments to several banking laws

Monday, 16 June 2014 00:00 Published in Metro - The Daily Tribune
A lawmaker is calling for amendments to several banking laws and regulations to distinguish the
non-stock savings and loan associations (NSSLAs) from the countrys regular banks.
In a speech before members of the Confederation of Non-Stock Savings and Loan Associations
Inc. (Consla) during its recent convention in Baguio City, Batangas Rep.Nelson Collantes,
chairman of the House committee on banks and financial intermediaries, said this representation
is aware of the distinguishing factors between regular banks and NSSLAs.
In terms of the purpose of regular banks, they are established mostly for profit while NSSLAs
support the pursuit of common economic and social goals of its members, he said.
He pointed out that while regular banks are allowed to make speculative and diverse
investments, NSSLAs are limited to safe and non-speculative investments like government
securities and deposits with banks.
With these and other defining factors, it is clear that NSSLAs are quite different from regular
banks and must not be treated similarly, he stressed.
According to Collantes, House Bill 3112 or an Act Amending the New Central Bank Act is
now pending with his committee.
The amendments contain provisions that would distinguish NSSLAs from regular banks such
that regulations must not be applied equally to regular banks and NSSLAs.
If we are to champion the welfare of the more than seven million members of NSSLAs, we
must continue our efforts in distinguishing NSSLAs from regular banks, he said.
In the same way that Islamic banks are given consideration taking into account their peculiar
characteristics, NSSLAs have characteristics that must warrant special consideration in terms of
supervision by the Bangko Sentral ng Pilipinas (BSP), he added.
House Bill 3112 is authored by Collantes himself and House Speaker Feliciano Belmonte.
At the same time, Collantes said he met with the leaders of Consla for amendments to Republic
Act 8367, known as the Revised Non-Stock Savings and Loan Associations Act of 1953.
He also said his committee will soon review BSP Memorandum Circular No. 789 that amended
the Manual of Regulations for Non-Bank Financial Institutions Applicable to NSSLAs,
particulary Section 5 which adds Section 4392S that enforces stricter rules and regulations for
the provision of allowance for probable losses and Section 10 that amends Section 3126S which
limits the distribution of dividends to once a year.
Earlier, Conslas Board of Trustees had issued a resolution urging BSP to either revise or totally
repeal BSP Circular No. 789 or suspend the implementation of two of its sections which were
reportedly issued in violation of their right to due process.
It said the recommendations of its technical working group were not considered during the
formulation, finalization and issuance of the circular on Feb. 28, 2013 despite numerous position
papers submitted by the group.
The failure of the BSP to consider its recommendations in coming up with the circular, according
to Consla, also constitutes failure of due process.

It insisted that Section 5 of the circular is not supported by any compelling reason as no less
than the BSP Status Report on the Philippine Financial System for the 1st semester of 2013
underscored the NSSLA industrys sound and stable status, including the continuously improving
quality of loan and other assets.
On the other hand, Consla said Section 10 violates Republic Act 8367 (An Act Providing for the
Regulation of the Organization and Operation of Non-Stock Savings and Loan Associations),
unreasonable and violates the constitutional rights to due process and freedom to contract of the
association and its members.
While the group understands that the objective of BSP Circular No. 789 is to further strengthen
the NSSLA industry, BSPs implementation lacked proper consultation such that the strict
implementation of the guidelines of the circular that are stricter than those imposed on banks
would cause higher loan loss provisioning for NSSLAs that will unduly erode the associations
profitability, thus endangering the viability of the entire NSSLA industry.
Whereas, the Circular accordingly diminishes the NSSLAs right to declare dividends to its
members, who will lose confidence in their respective Associations, and thereby terminate their
deposits and withdraw their contributions, to their detriment, especially borrowing members who
will again fall prey to loan sharks, it pointed out.
Consla president Col. Ricardo Nolasco Jr. of PAF (retired) has requested BSP to create a
committee that would research and study the unique operation of the countrys NSSLAs
compared to the regular banking institutions.
Nolasco said a thorough study would make the policies, circulars and rules and regulations
tailor-fit for the unique operation of an industry such as the NSSLAs.
Nolasco, also chairman of the board of trustees of the Air Materiel Wing Savings and Loan
Association Inc. (AMSLAI), identified Conslas regulatory concerns into regulations that have
been rendered obsolete due to the sweeping changes in the business and market conditions and in
technology since 1997 when Republic Act 8367, known as the Revised Non-Stock Savings and
Loan Associations Act of 1953, was enacted into law.

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The survival and stability of NSSLA is greatly affected by the policy directions

September 29, 2015

Solon calls for amendments to several banking laws

to Consla, also constitutes failure of due process.

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