Circular No. 1224: Amendments to Regulations on Definition of Financial Intermediaries, Issuance of Bonds and Commercial Papers, and Borrowings

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BANGKO SENTRAL NG PIL!PINAS
Subject: Amendments to Regulations on Definition of Financial Intermediaries. Issuanceof Bonds and Commercial Papers. and Borrowings from Banks. Quasi. Banks and Other Financial Intermediaries The Monetary Board, in its Resolution No. 1023 dated 16 October 2025. approved the amendments to the provisions of Section 101-Q of the Manual of Regulations for Non-Bank Financial Institutions (MORNBFl) defining financial intermediaries, Section 2461205-Q of the Manual of Regulations for Banks IMORB)/MORNBFl on the Issuance of Bonds and Commercial Papers and Section 2931242-Q of the MopB/MORNBFl on Borrowings from Banks. Quasi-Banks and Other Financial Intermediaries. CIRCULAR No. OFFICE OF THE GOVERNOR Series of 2025
Section ,. Section 101-Q of the MORNBFl is hereby amended to read, as follows:
101-Q QUASI-BANKING FUNcrioNS
1224 xxx
As used in the definition of quasi-banking funct/bns, the following terms and phrases shall be understood, as follows XXX Financial", termedlanes F1hancia/intermediaries shall meanjuridical entities whose principal functions include the lending. investing or placement of funds or evidences of indebtedness or equity deposited with them, acquired by them. or otherwise coursed through them either for their own account or for the account of others, . xxx Functionssha!I mean actions, activities or operations of an entity by which its business or purpose is fulfilled or carried out. The business or purpose of an entity may be determined from the purpose clause in its articles of incorporation/partnership, and from the nature of the business indicated in its application for registration of business filed with the appropriate government agency. A financial intermediary. as defined under this Section. performs on a regular and recurring basis. the functions such as. but riot limited to, the following:
a. Receive funds from persons or entities through traditional deposits. or issuance of debt or equity securities; and make available/lend these funds to another person or entity. and in the process acquire debt or equity securities; . b. XXX XXx

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, e. Realize regular income xxx.
Financial intermediaries shall include, but not limited to the following entities:
a. An entity licensed and/or registered with and/or supervised by the Bangko Sentral or other relevant regulatory agencies. that meets the definition of a financial intermediary under this Section, ' This includes a bank; quasi. bank: investment house 11Hj; investment company; trust entity, including borrowing from funds it managed and administered under a trust agreement; financing company; securities dealer/broker; lending investor; pawnshop; money broker: fund manager; cooperative: insurance company; non-stock savings and loan association (NSSLA, ); building and loan association; venture capital corporation; non-bank credit card issuer; asset management company; credit granting entity; and other non-bank financial institution (NBFl) considered as financial intermediary as defined under this Section; b. A government financial institution' such as government-owned or - controlled financial institution that performs banking or credit functions; c. d. An entity performing any of the functions of a financial intermediary. In the case of borrowings from funds managed and administered by regulated entities under an agency agreement. the same shall be considered as borrowings from a financial intermediary if the principal of the fund meets the definition of a financial intermediary as provided under this Section (Financial/ritermediaries). International financial institution that performs banking, credit or investment functions;3 xxx Guidelines on Lender Count xxx
Section 2. Section 246 of the MORB is further amended to read. as follows:
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246 ISSUANCE OF BONDS. COMMERCIAL PAPERS AND OTHER DEBT SECURITIES/INSrRUMENTs All banks with quasi-banking authority issuing bonds, commercial papers. or other debt securities/instruments to counterparties that meet the definition of lenders under Sec. 241 shall comply with Republic Act No. 8799 or the Securities Regulation Code (SRC) and its Implementing Rules and Regulation, and other applicable rules and regulations issued by the Securities and EXchange Commission (SEC ). They may issue bonds, commercial papers, or other debt securities/instruments without prior Bangko Sentral approval: Provided, That they meet the prudential criteria as described in Sec. 111 (Prudentia/ enterb/: Provided further That bonds or other debt securities/instruments issued are enrolled and/or Other domestic regulatory agencies in dude the Securities and EXchange Commission EEC). Insurance Commission ticjand Cooperative Development Authority ICDA). among others A government financial institution refers to a financial institution created by special law orcrganized as a stock or non. stock corporation. in which the government owns directly orindirec. Iy. wholly or in the case of stock corporation. at least majority of the capital stock Examples of CFls are Philippine Deposit Insurance Corporation and Government Service Insurance System. among others, International financial institution includes the International Monetary Fund. World Bank. Asian Development Bank Bank for Internationalsettlement. International Finance Corporation and other multilateral development banks. among others' 2 3
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,. traded in a market which is organized in accordance with the SEC rules and regulations. For banks without quasi-banking authority that are allowed under applicable laws or regulations to issue bonds. commercial papers, or other debt securities/instruments, they may do so under a private offering' or equivalent form of negotiated issuance to any counterparties without prior Bangko Sentral approval; ProvkiedThat the prudential criteria as described in Sec, 1/1 and relevant guidelines of the SEC will be complied, as applicable. In the case of issuance of green, social. or sustainability bonds. including other sustainable bonds falling within their acceptable definition. the issuing bank shall comply with the pertinent guidelines of the SEC as well as the disclosure requirements in Sec. 153. In addition. the issuing bank shall not engage in "greenwashing' as defined in Sec. 614. Bonds, commercial papers, or other debt securities/instruments issued by banks shall comply with applicable regulations, including but not limited to customer due diligence requirements of Part 914nti-MoneyLaunderingj, 4MLA) and Combattfr7g the Financing of Terrortsm Regulations) and foreign currency liquidity management under Appendix 71 in the case of foreign currency denominated issuance. as applicable. Notfo@ to the Bangko Sent, allag Pinofr, as Within five (5) banking days from approval by the bank's board of directors of the bond/commercial paper/other debt security/instrument issuance. the bank shall submit the following documents to the appropriate supervising department of the Bangko Sentral:
a. Notification letter signed by the president or officer of equivalent rank, indicating the amount and the terms of the bond/commercial paper/other debt securityfinstrument issuance. The letter shall also include the funding plan of the bank in the next three (3) years considering its strategic direction and business model. The funding plan, at the minimum, shall contain how the planned issuance factors into the funding plan; . b. Secretary's certificate on the approval of the board of directors on the bond/commercial paper/other debt security/instrument issuance; Certification signed by the bank's president or officer of equivalent rank and chief compliance officer. that the bank has complied with the prudentia! requirements as provided in this Section, and the relevant requirements of the SRc and other pertinent rules and regulations of the SEC: and c. d. Written undertaking to enroll and/or trade the bonds or other debt securitiesfinstruments for public issuance or offering, in a market which is organized in accordance with SEC rules and regulations. as applicable. xxx 4 The offering and sale of securities directly to a limited number of investors lie. . riot more than 191without a public offering.
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Prohibition on Issuing Banks and theirRehted Entities5. The issuing bank. including its related parties as defined in Sec. 131. except for its trust department or related trust entities. are prohibited from holding or acting as market makers of the bank's listed/traded bonds, OF commercial papers (CP), or other debt securities/instruments. The underwriter/arranger that is a related party of the issuing bank may be a holder of the bonds, CPS. or other debt securities/instruments:
Provided That it is part of the underwriting agreement. xxx.
Section 3. The amendments to Section 246 of the MopB as provided in Section 2 of
this Circular. shall be adopted in Section 205-Q of the MORNBFlwith some amendments, as follows:
Enforcement Action. xxx. a, The title of Sec. 205-Q and the introductory provisions shall read as:
"205-Q ISSUANCE OF BONDS, COMMERCIAL PAPERS AND OTHER DEBT SECURITIES/INSTRUMENTS All quasi-banks (QBs) issuing bonds, commercial papers, or other debt securities/instruments to counterparties that meet the definition of lenders under Sec. lotQ shall comply with Republic Act IRA. ) No. 8799 or the Securities Regulation Code (SRC) and its Implementing Rules and Regulation. and other applicable rules and regulations issued by the Securities and EXchange Commission (SEC). They may issue bonds, commercial papers, or other debt securities/instruments without prior Bangko Sentra! approval: Provided That they meet the prudential criteria as described in Sec. 111-Q (Prudentia/ criteria! Provided further; That bonds or other debt securities/instruments issued are enrolled and/or traded in a marketwhich is organized in accordance with the SEC rules and regulations. Bonds. commercial papers, or other debt securities/instruments issued by QBs shall comply with applicable regulations including but not limited to customer due diligence requirements of Part 9,4ntfMoney Laundering 14MLA/ and Combatt^^g the Financing of Terrortsm 17egu/ations) and foreign currency liquidity management under Appendix Q-4. ^ in the case of foreign currency denominated issuance, as applicable. b. The amendments to Sec. 246 of the MORB under the sub-topics Notice to the Bangko Sentra/rig Pinoinas"and "Prohibition on Issuing Banks and Their Related Entities"shall also be adopted in Sec. 205-Q under the same sub-topics except that reference to "bank/bank's" shall be replaced with "QB/QB's. ' *
Section 4. Section 2931242-Q of the MORB/IVIORNBFl is hereby amended, as follows,
293 1242-Q BORROWINGS FROM BANKS, QUASI-BANKS AND OTHER FINANCIAL INTERMEDIARIES The following borrowings from banks. quasi-banks and other financial intermediaries as defined under Sec, 101-Q IFir, anclef intermedbries) shall not be considered as deposit substitutes:
5 For further clarification on the prohibition of related entities from holding an issuing bankslisted/traded bonds. commercial papers or other debt securitiesfinstruments please see Memorandum No. M-2020-001 dated 30 January 2020

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c. Bonds CornmercA^/ Papers and Other Debt Securrt^^$,.?fistruments, Bonds,
commercial papers, and other debt securities/instruments that are issued to banks, quasi-banks and other financial intermediaries as defined under Sec.
101. Q (Financial/ritermediar, bs) shall comply with the regulations prescribed
under Sec. 2461205"Q on the issuance of bonds. end commercial papers, and other debt securities/instruments xxx
Section 5. Transitory Provision. The following provision shall be incorporated as a
footnote to Section 101-Q of the MORNBFl under "Finenci;3/1ntermed/;anes". Borrowings from lenders who are no longer considered as financial intermediaries based on the revised definition after the effectivity of this Circular shall continue to be excluded from the lender count until borrowings from them are paid or renewed.
Section 6. This Circular shall take effect fifteen (15) calendar days following its
publication either in the Official Gazette or in a newspaper of general circulation.
2.2 November 2025
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FOR THE MONETARY BOARD:
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ELI M, REMOLONA, aR.
Governor