BSP simplifies rules on forex transactions

The Bangko Sentral ng Pilipinas (BSP) has made the rules on foreign exchange (FX) more relaxed as part of continuing efforts to have an appropriate regulatory framework for foreign currency transactions, the central bank chief said in a statement Monday.

BSP Governor Amando Tetangco Jr. said the Monetary Board has approved seven amendments to the Manual of Regulations on Foreign Exchange Transactions (FX Manual).

He said the continuing review of FX regulations is consistent with the BSP’s commitment to maintain a safe and sound financial system, a stable FX market, and appropriate monetary policy supportive of sustained and inclusive economic growth.

As part of the amendments, the BSP is now allowing the sale of FX (on spot and forward basis) by authorized agent banks, subsidiaries or affiliates to residents without prior BSP approval as along as all the documentary requirements are met.

"The policy is expected to further facilitate legitimate trade transactions and will allow the BSP to better capture data on trade transactions through reporting of gross importations," the central bank said.

Another change is the inclusion as beneficiary of FX payments and remittances by Philippine residents to settle trade and non-trade obligations as long as supporting documents prove that the payment was arranged with the centralized settlement unit.

The BSP said this is intended to fast-track the settlement of transactions, considering the current trends involving the use of a clearing unit for payments or financial transactions such as payment and treasury centers and hubs by members of a group of companies.

Another amendment allows the sale of foreign exchange to residents settling credit card obligations to resident companies.

"This will address cases where obligations of residents to resident credit card companies incurred with non-residents as counterparties are billed and payable in foreign currency," the BSP said.

The central bank also simplified the guidelines for better understanding and compliance through consolidated reporting of importations.

However, private sector non-bank borrowers are now required to have a long-term debt-to-equity ratio of 75/25 or better for the entire duration of their foreign currency loans.

"This aims to provide better guidance for prospective private sector non-bank borrowers," the BSP said.

The amendment expanded the coverage of short-term interbank loans that do not require prior BSP approval.

"Short-term interbank loans will now cover short-term interbank loans of financial institutions that are allowed to engage in interbank loans under existing BSP rules," the central bank said.

The amendment also exempted from the P10,000 limit on cross border transfers of Philippine peso the amount of refund to outbound passengers exempted from the payment of International Passenger Service Charge.

"This will address the possible breach of the limit arising from the implementation of such refund," the BSP said. – Danessa O. Rivera/VS, GMA News