Monetary Board sets ‘ know-your-member’ rules for loan associations

THE Monetary Board (MB) approved on Tuesday new guidelines to protect Non- Stock Savings and Loan Associations (NSSLAs) members and its investments.

In a statement on Tuesday, the MB said the guidelines cover the establishment of the true identity and eligibility of persons who want to become members of NSSLAs.

“The Know-Your- Member (KYM) guidelines set clear BSP’s expectations on the responsibilities of the Board of Trustees and Management of NSSLAs to establish and implement effective risk management system and risk control, and to set out the documentary requirements for membership, to ensure that all members are eligible,” the BSP said.

The rules also prevent the “use of NSSLAs, by unscrupulous persons, as a means to profit or to take advantage of their nature and operations.”

At the same time, the MB also approved rules and regulations covering NSSLAs’ investments using their unused or excess funds.

“Said guidelines clearly define the allowable investments and limit of such investments that NSSLAs can enter into,” the BSP said.

“The investments, which must not exceed 10% of the NSSLA’s total assets, unless otherwise approved by the MB, must be safe, readily marketable, high grade and locally issued,” it added.

NSSLAs are non- stock, nonprofit corporation engaged in the business of accumulating the savings of its members and using such accumulations for loans to members to service the needs of households by providing longterm financing for home building and development and for personal finance.

According to Republic Act. No. 8367, or the Revised Non~Stock Savings and Loans Association Act of 1997, an NSSLA shall confine its membership to a well-defined group of persons and shall not transact business with the general public.

A “well- defined group” shall be defined by the Monetary Board, and shall consist of employees, officers, and directors of one company, including member- retirees; government employees belonging to the same department/ branch/ office; including member-retirees; and; immediate members of the families (up to second degree of consanguinity or affinity).

Data from the BSP showed there are 65 NSSLAs as of Jan. 22 this year. —