BusinessWorld: Peso accounts now available to aliens

REPORT FROM BUSINESSWORLD Foreign diplomats and nonimmigrant visa holders now have access to local currency-denominated loans and peso savings deposit accounts with Philippine banks. In a memorandum dated Aug. 15, Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor A. Espenilla, Jr. said the policy-making Monetary Board has given local banks a free hand in providing these services to embassy officials and nonresidents. Lending to both embassy officials and nonresidents, however, is limited to consumer loans, including credit cards, auto and appliance loans. Philippine banks were not allowed to grant them real estate and housing credit, Mr. Espenilla said. The Monetary Board mandated lenders to adopt measures to mitigate credit risk, including requiring borrowers to submit a letter from their employers or respective embassies. Foreign diplomats may open peso savings deposit accounts with Philippine banks "provided they submit proof of conversion of the foreign currency to peso," the memorandum said. The new directive supersedes an earlier issuance by the late central bank Governor Rafael B. Buenaventura prohibiting domestic banks from extending peso loans to nonresident aliens. Mr. Buenaventura issued the circular in December 1999 in a bid to curb undue speculation in the foreign exchange market following a contagion that had hit the region a decade ago. The latest memorandum also amended the provisions of an August 1967 central bank directive, which stated that peso deposits should be funded from inward foreign exchange remittance.— Maria Eloisa I. Calderon/BusinessWorld