BSP sets rules for nonstock savings associations

THE BANGKO SENTRAL ng Pilipinas (BSP) has released new guidelines meant to boost corporate governance in nonstock savings and loan associations (NSSLAs) following its issuance of rules on the screening and monitoring of officials of BSP-supervised financial institutions.

Circular No. 1115 Series of 2021 signed by BSP Governor Benjamin E. Diokno outlines the duties, responsibilities and qualifications of members of NSSLAs’ board of trustees, officials, and employees.

“[T]hese guidelines take into account the unique challenges of governance related to the member-driven nature of NSSLAs, as well as existing applicable governance,” the circular said.

The circular said the BSP can look through its own records to determine the qualifications of a trustee. Members of an association’s board of trustees will also be required to attend a special seminar on corporate governance in compliance with BSP-prescribed syllabus.

It said the Monetary Board will be the confirming authority for trustees, presidents and chief executive officers of NSSLAs with assets of P10 billion and above.

Meanwhile, the Financial Supervision Sector will be in charge of confirming trustees and chief executives of NSSLAs with assets below P10 billion, as well as NSSLAs’ treasurers, heads of internal audit, risk management and compliance functions, and other officers with rank of senior vicepresident and above.

Monetary Board or BSP approval will not be required for the re-election or re-appointment of officers.

The circular also defined a complex NSSLA as an institution with assets of at least P6 billion. These institutions should satisfy at least one of the following characteristics: having more than two thousand members; operating non-conventional delivery platforms such as electronic platforms or agents; or has a network of at least five service units, whether branches or satellite offices.

Meanwhile, NSSLAs with operational limits that do not meet qualifications of the complex type will be considered as “simple NSSLAs.”

Aside from the board of trustees, complex NSSLAs should have committees focusing on audit, risk oversight, corporate governance, and membership. On the other hand, a simple NSSLA is expected to have at least audit and membership committees.

The BSP said an NSSLA’s president or CEO will be primarily responsible for achieving targets for conduct and behavior, implementing strategies, and promoting the long-term interest of an NSSLA.

Meanwhile, associations with assets of at least P5 million are required to have a full-time manager to take charge of their operations.

The BSP also requires a bond from officers and employees that have access to money or negotiable securities before entering their duties. This will provide for indemnity to the NSSLA against the loss of money or security by reason of dishonesty.

Central bank data showed there are currently 63 registered NSSLAs. These associations collect savings from members of certain industries that are used to finance the personal loans of members.

Prior to its circular on NSSLAs, the BSP also released guidelines on corporate governance on the hiring and performance management of bankers. —