The Bangko Sentral ng Pilipinas (BSP) has excluded the exposure of banks and quasi-banks in clearing and settlement accounts from the single borrower’s limit (SBL) rules to promote the smooth function of financial markets. The central bank said that the distinct nature of clearing and settlement accounts as mere “pass through” for short-term payment transactions entails relatively low credit exposure to the clearing and settlement bank. Clearing and settlement accounts must be maintained with a designated local settlement bank, or a foreign settlement bank, to be eligible for to skirt the SBL limit. Lenders must have an agreement with a settlement bank, stipulating that the account has been opened and maintained exclusively for short-term payment transactions. They must have an internal control mechanism covering settlement transactions, and the accounts must be properly segregated, the BSP said.

Source: Manila Times July 07, 2017 18:11 UTC