Pursuant to Monetary Board Resolution No. 1382 dated 30 September 2010, the provisions of Section X151 and Subsections X151.6 and X151.12 of the Manual of Regulations for Banks (MORB) are hereby amended, as follows:

SECTION 1. The provisions of Section X151 on the establishment/relocation/ voluntary closure/sale of branches are hereby amended to read as follows:

œSec. X151. Establishment/Relocation/Voluntary Closure/Sale of Branches. The BSP shall promote and maximize the delivery of efficient and competitive banking services especially to underserved markets and customers through innovative policies. Toward this end, the following are the rules and regulations that shall govern the establishment, relocation, voluntary closure and sale of local branches of domestic banks, including locally-incorporated subsidiaries of foreign banks and the establishment of branches of foreign banks in the Philippines shall continue to be goverend by the provisions of Section X 105 on liberalized entry and scope of operations of foreign banks and Section x153 on establishment of additional branches of foreign banks.

For purposes of this Section and its Subsections, the following definitions shall apply: œx x x. 

œOther Banking Office  (OBO) shall refer to any permanent office or place of business in the Philippines other than the head office, branch or extension office, which engages in any or all of the following non-transactional banking-related activities:

1. Market loans, deposits and other bank products and services;

2. Accept loan applications and conduct preliminary credit evaluation as well as perform credit administration support services;

3. Host on-site automated teller machines (ATMs);

4. Perform customer care services;

5. Perform customer identification process, receive account opening documents and facilitate account activation; Provided, that account opening approval and actual opening of deposit accounts shall be done only at the head office/branches/extension offices; and

6. Such other non-transactional banking related activities as may be authorized by the BSP.

An OBO may also be recognized as œmicrofinance-oriented . A œmicrofinance-oriented OBO  (MF-OBO)/ micro-banking office  (MBO) shall refer to an OBO that primarily caters to the banking needs and services of microfinance clients and overseas Filipinos (OFs) and their beneficiaries. As contemplated under Appendix 45, œmicrofinance clients  are micro-credit borrowers and/or micro-depositors.

In addition to the non-transactional banking-related activities and services allowable for regular OBOs, MF-OBOs/MBOs may also engage in any or all of the following limited transactional banking activities and services that enable and facilitate financial inclusion and broader access to financial services:

1. Accept micro-deposits including initial deposit and service withdrawals thereof;

2. Accept check deposits of microfinance clients for collection and credit to own deposit accounts;

3. Disburse/release proceeds of micro-loans and collect loan amortization payments and related charges;

4. Present, market, sell and service microinsurance products in accordance with existing regulations;

5. Receive/pay-out funds in connection with authorized remittance transactions;

6. Act as a cash/money in and cash/money out for electronic money (e-money) transactions;

7. Collect premiums/pay out benefits from/to members of social security institutions such as the Government Service Insurance System (GSIS), Social Security System (SSS), Philippine Health Insurance Corporation (PhilHealth), Employees ™ Compensation Commission (ECC), and other government authorized pension and benefit systems;

8. Pay out benefits under government-sponsored conditional cash transfer schemes;

9. Accept utilities payments; and

10. Purchase foreign currencies up to the maximum equivalent of USD300 per client per day for credit to micro-deposit accounts;

subject to the following conditions:

a. An MF-OBO/MBO shall only perform the transactional activities it has specifically applied for and had been authorized by the BSP to perform. Subsequent enhancements are likewise subject to prior BSP approval;

b. The bank shall ensure the timely accounting and proper recording of all financial transactions of its OBOs and observe adequate internal control procedures to ensure the safety of funds and reliability of financial records and reports emanating from all transactions; and

c. The bank president shall submit within 30 calendar days from the end of a financial year a comprehensive statement under oath that all the bank ™s OBOs and their activities are duly authorized by the BSP.

SECTION 2. Subsection X151.6 on establishment of Other Banking Offices is amended to read as follows:

œSubsection. X151.6 Establishment of Other Banking Offices (OBOs). OBOs may be established with prior Monetary Board approval, and subject to compliance with the following:

œx x x

c. CAMELS composite rating not lower than œ3 , with Management component score not lower than œ3 ;

d. Not under Prompt Corrective Action (PCA) or under conditions subject to PCA;

e. No major supervisory concerns on safety and soundness such as those enumerated under Item e of Subsection X151.2 as of the date of application; and

f. Additional requirements for the establishment of MF-OBOs/MBOs:

1. At least fifty percent (50%) of total transactions generated are with microfinance clients;

2. It shall have a maximum on-site cash limit not exceeding P500,000 per day, commensurate to its level of banking activities;

3. It shall have adequate physical facilities and security arrangements as well as information and transaction support systems appropriate to the level of banking activities undertaken and services offered;

4. It shall be managed by a responsible officer with adequate experience or training in microfinancing activities; and

5. It shall have a manual of operations appropriate to its authorized activities that is periodically reviewed and updated and duly approved by the bank ™s board of directors.

œx x x .

œOBOs may be established only in areas where the bank is allowed to establish branches as provided under Subsec. X 151.4 on branching guidelines.

œTransitory provision. The bank shall declare to the BSP the desired classification (regular or MF-OBO/MBO) of its existing OBOs within 30 calendar days from the effectivity of this Circular; provided that all existing OBOs shall conform to the provisions of this Circular or phase out non-conforming activities within six (6) months from its effectivity; Provided, further, That the president of a bank with an existing OBO covered by this transitory provision shall certify under oath to the BSP within 30 calendar days from the end of the transition period that all existing OBOs conform to the provisions of this Circular. 

SECTION 3. Subsection X 151.12 on sanctions is amended to read as follows:

œSubsec. X151.12 Sanctions.

œ1. Any violation of the provisions of Subsecs. X151.1 to X151.11, depending on the materiality or seriousness of the violation, may constitute a ground for considering the same as unsafe and unsound banking practice and may be a ground for cancellation of the franchise and closure of any branch/ OBO established herein without prejudice to the imposition of the applicable criminal and administrative sanctions prescribed under Sections 36 and 37, respectively, of R.A. No. 7653; and

œx x x 

SECTION 4. Appendix 45 (Appendix to Section X361) on the Notes on Microfinance is hereby amended as presented in Annex A^* of this Circular.

SECTION 5. Effectivity - This Circular shall take effect fifteen (15) days following its publication either in the Official Gazette or in a newspaper of general circulation.

FOR THE MONETARY BOARD:

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^* Text Available at Office of the National Administrative Register, U.P. Law Complex, Diliman, Quezon City.