BSP welcomes Salceda’s proposed Virtual Banking Act

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno wrote House ways and means chair Joey Salceda to inform him that the regulator welcomed the Albay lawmaker’s House Bill 5913, or the proposed Virtual Banking Act.

The bill seeks to establish a separate regulatory and industry development regime for virtual-only banks in the country.

In a letter dated September 7, Diokno told Salceda that the BSP “welcomes the proposed House Bill on Virtual Banking Act.”

“This will reinforce the provisions of the General Banking Law with respect to the proposal of the BSP which introduces digital banks as a new bank classification distinct from the existing categories of banks (i.e., U/KBs, TBs, RBs, Coop Banks and Islamic Banks),” according to the BSP’s response paper.

“The creation of a regulatory framework for digital banks promotes a level playing field by allowing new entrants to credibly compete with incumbent banks, as well as prevents regulatory arbitrage,” BSP added.

Under Salceda’s proposal, virtual-only banks will be a separate classification of banks.

Salceda also outlines the minimum macro-prudential standards for virtual-only banks, and opens the virtual banking sector to some degree of foreign ownership to attract some of the financial technology (FinTech) know-how already developed in other countries, and to ensure adequate capitalization of the industry.

Salceda also encouraged virtual-only banks to pursue financial inclusion initiatives.

“I thank Governor Diokno for the BSP’s support for our legislative initiative. We filed this on January 6, anticipating the need for contactless payments due to Covid-19,” he said.

“Just the day after we filed this bill, we received support from the Cebu Bankers Club for this proposal, and former colleagues in the industry have also expressed their appreciation for this proposal,” he added.

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Source: Latest Politics News Today (Politics.com.ph)