Bangko Sentral bares check clearing, settlement reforms

THE Bangko Sentral ng Pilipinas (BSP) on Friday announced changes to regulations covering the return of bounced checks by banks as well as the rollout of the Intraday Settlement Facility (ISF).

The reforms aim to improve the efficiency and safety of the country's payment systems, the central bank said in a statement.

Banks are currently allowed until the following banking day to return bounced and defective checks to the presenting bank, with the transfer of funds to the drawee bank dated on the day of the check's deposit.

This retroactive dating, however, leads to alterations in the balances of banks' settlement accounts with the Philippine Payments and Settlements System-Plus (PhilPaSSplus), the BSP-operated facility facilitating check settlement.

To reduce settlement and liquidity risks due to mismatches, the central bank said the updated rules will allow banks to return high-value, «not sufficiently funded» (NSF), and defective checks on the same day of deposit.

While banks can still return NSF and questionable checks the next banking day, the settlement will not be backdated.

The BSP said the change would ensure a reliable fund transfer from the check issuer to the payee, improving confidence in the check clearing system and facilitating better fund management for check users.

Banks will also no longer be allowed to incur overdrafts or withdraw funds beyond what is contained in its demand deposit account (DDA). Consequently, banks will no longer be required to utilize the BSP's Overdraft Credit Line (OCL).

The central bank said the revised policy would not impact the withdrawal of check deposits by the next banking day at the latest.

The BSP also brought back the PhilPaSSplus Intraday Liquidity Facility, now called the ISF, to align with operational changes resulting from the BSP's adoption of global payment standards and the complete automation of the system.

The facility enables banks to access funds from the central bank, preventing delays tied to PhilPaSSplus settlements.

The amended check policy will be implemented three months from the effectivity date, which is 15 days after publication. The ISF rules, meanwhile, take effect three months from publication.

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