Consistent with Bangko Sentral ng Pilipinas' (BSP) mandate to promote a safe and sound banking system, the Monetary Board approved the enhanced Supervisory Policy on Granting of a License/Authority (Licensing Policy) to strengthen and align its screening function with international standards and provide more consistency in how the risk-focused supervision is applied to the licensing process. This will also rationalize and streamline the criteria that BSP- Supervised Financial Institutions (BSFI) need to comply with to facilitate ease of doing business. The BSP thereby reaffirmed its policy of not restricting the scope of risk-taking activities of BSFIs, provided the licenses and/or authorities are in line with their business model and strategic direction, and the BSFIs demonstrate the capacity to implement these strategies and the ability to manage attendant risks.

The enhanced Licensing Policy sets forth BSP's expectations and criteria in granting licenses and/or authorities, as well as the right to reject applications that do not meet the criteria and/or deploy appropriate enforcement actions against BSFIs that no longer meet the criteria or standards. To be eligible, BSFIs are expected to meet three basic prudential criteria (i.e. CAMELS rating of at least "3"; governance and independent control functions that meet what is considered appropriate given the BSFI's size, complexity of activities and risk profile; and compliance with BSP directives). These criteria are intended to incorporate the licensing process into BSP's enforcement regime, anchored on good governance, sound risk management system and effective controls system.

The enhanced Licensing Policy features a 3-tier licensing system to facilitate ease of doing business and submission of applications. Type A category are license applications where compliance with the prudential screening criteria is a pre-condition for the applicant BSFI to be considered eligible. Type B category are license applications that do not require compliance with prudential screening criteria. Type C category are activities which no longer require prior BSP approval but shall be subject to submission of reports/certification/notification that pre-qualification requirements are met. Along with the rationalized and simplified prudential criteria, the 3-tier licensing system promotes transparency of the licensing process and facilitates much faster action on applications.

Source: Bangko Sentral ng Pilipinas (BSP)