GFI’s with UKB license can accept gov’t deposits

Only government financial institutions with a universal bank license and a globally accepted bank rating system will be allowed to accept government deposits, the Department of Finance said.

The Finance department issued (DOF) circular 1-2015 laying down the revised guidelines on the deposit and maintenance of funds by all national government agencies, governmentowned or -controlled corporations (GOCCs), and Local Government Units (LGUs).

“As the government’s steward of sound fiscal policy, the DOF is mandated to formulate policies that ensure the effective management of government resources. This includes ef- fective cash management and transparency of public funds,” the agency said.

“For agencies specifically allowed by law, rules, and regulations to retain income and/or for operations and/or working balances, the deposit of government funds by National Government Agencies, GOCCs and LGUs is limited only to government financial institutions with a universal bank license and a CAMELS rating of at least 3,” it noted.

CAMELS ratings assess a bank’s overall condition through an evaluation of capital, asset quality, management, earnings, liquidity and sensitivity to market risk.

The move forms part of the Aquino administration’s strategy to strengthen the overall fiscal position of the country.

The DOF has also highlighted the importance of having a Treasury Single Account (TSA) System , a unified structure of government bank accounts that allows greater cash management.

The TSA forms part of the government’s public financial management reform program, which seeks to simplify, improve and harmonize the financial management processes and information systems of the public sector as well as reengineer and integrate relevant systems of the Department of Budget and Management, Commission on Audit, DOF and implementing agencies.

It provides accurate and timely information on bank account balances, revenue and cash positions of the government including its line agencies. It also facilitates better fiscal, debt management and monetary policy coordination.

Apart from this, the TSA ensures systematic recording and reporting of all liabilities of government entities including real and contingent liabilities to enable the national government to manage its financial exposure.

“By enabling the National Treasury to determine how much money it has in real time, the TSA allows it to make better decisions on treasury operations, reducing costs in the process. Reform in this government continues its onward march with simple but effective ideas like the TSA,” Finance Secretary Cesar Purisima said.