The Bangko Sentral ng Pilipinas (BSP) is set to amend and streamline regulations on all banks and non-banks’ reserves-related computation and reporting requirements as part of its prudential reporting framework.

The proposed changes are contained in a draft circular recently circulated among banks and non-banks for comments and suggestions. Another memo is also released over the weekend seeking comments from the banking sector. Both proposals have a feedback deadline of Jan. 19.

Based on the draft circular, there will be changes in how the banks and non-banks compute their reserve position as per the reserves requirement rules.

The BSP said the reserve position of any bank and the penalty on reserve deficiency will be computed based on a seven-day week, starting Thursday, Friday and ending Wednesday, Thursday, including Saturdays, Sundays, public special/legal holidays, non-banking days or declared half-day holidays and days when there is no clearing.

This is “provided that with reference to public special/legal holidays, non-banking days, unexpected declared nonbanking days, declared half day holidays and days when there is no clearing, the reserve position as calculated at the close of the business day immediately preceding such public special/legal holidays, non-banking days and unexpected declared non-banking days and declared half-day holidays and days when there is no clearing, shall apply thereon.”

The BSP said the shift in the start of the reserve week from Friday to Thursday will start on April 4, 2024 while the reserve position of banks for the week prior to implementation and submission of the updated reserves-related reports will still consider data as of April 4, 2024 such as the reserve week from Friday to Thursday which is from March 29 to April 4, 2024.

The same goes for non-banks. “For this purpose, the principal office in the Philippines and all other offices located therein shall be treated as a single unit,” said the BSP in explaining the computation of the reserve position.

As for the draft memo, the central bank stated the guidelines on the preparation of reserves-related reports.

The BSP said that “recognizing the significant developments in the prudential reporting framework which supports the BSP’s surveillance and supervisory functions” it will set the guidelines on the preparation and submission of the reserve-related reports of banks, non-banks with quasi-banking functions and trust entities “to streamline information provided in these reports.”

The memo said that starting April 4, 2024, reserves-related reports will be submitted via the updated extensible mark-up language or XML format under the BSP Relationship Management System, with the prescribed deadlines.

The BSP has been moving closer to an application programming interface (API)-based prudential reporting system for timely and daily data that is crucial in monitoring a digitalized financial sector.

BSP Governor Eli M. Remolona Jr., a global central banker, has said that most big banks, even thrift and some rural banks, have adopted digital reporting via API.

Banks have to adopt API because the BSP has started to migrate prudential reporting through the API since June 30, 2023.

Remolona stressed on the importance of a daily data as reported by the banks. Right now, bank reporting is on a monthly basis, depending on the banks. Some submit quarterly reports.

The migration to API platforms was adopted in stages for efficiency in data preparation and in the validation and processing of information by the BSP.  

The API is a set of standard messages between two computer systems – such as BSP and the banks – for machine-to-machine submission and validation of reports.

It will change the central bank’s regulatory reports process and will minimize risks related to human intervention and e-mail transmission of reports at less costs for BSP supervised financial institutions or BSFIs.

In essence, the BSP said API makes banking supervision “much easier” and “it will make the banks more stable and more resilient”.

As of mid-2023, about 17 BSP prudential reports went live via the API. The submission of these reports use XML format through the API.

Seven of the 17 prudential reports to go on live API are the following: Financial Reporting Package (FRP); Basel 1.5 Capital Adequacy Ratio or CAR Report; Basel III Capital Adequacy Ratio Report; Basel III Leverage Ratio or BLR Report; Basel III Liquidity Coverage Ratio or LCR Report; Basel III Net Stable Funding Ratio or NSFR Report; and the Expanded Report on Real Estate Exposures or ERREE.

The other 10 prudential reports are: Financial Reporting Package for Trust Institutions or FRPTI; Income Statement on Retail Microfinance Operations and Report on Microfinance Products; Minimum Liquidity Ratio or MLR Report; Report of Selected Branch Accounts; Report on Compliance with Mandatory Credit Allocation Required Under Republic Act Np. 6977 (as amended by RA 8289 and 9501) or the MSME Compliance Report; Report on Cross-Border Financial Positions; Report on Electronic Money Transactions; Report on Project Finance Exposures or RPFE; Report on Repurchase Agreements of Banks/Quasi-Banks or the REPO Report; and Stress Testing Reports Covering Credit and Market Risks or STRESS Test.