MALACAÑANG
M a n i l aPRESIDENTIAL DECREE No. 72 November 29, 1972
AMENDING REPUBLIC ACT NUMBERED TWO HUNDRED AND SIXTY-FIVE, ENTITLED "THE CENTRAL BANK ACT"
WHEREAS, there were pending before Congress prior to the promulgation of Proclamation No. 1081, dated September 21, 1972, urgent banking measures proposing amendments to Republic Act No. 265, entitled "The Central Bank Act", which are vital to the national development program of the Government;
WHEREAS, an extensive survey and study of the banking and credit system had been undertaken for the purposes of assessing its adequacy in Philippine economic growth, and of facilitating the savings-investment process in development;
WHEREAS, the result of the survey was an integrated set of recommendations which were accepted, with modifications by the monetary authorities, and made the basis for this decree to effect reforms in the banking system, and to render monetary and credit policies more responsive to the requirements of economic development;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers...
Details
Amends
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Amended by
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Presidential Decrees
Amending Republic Act Numbered Two Hundred And Sixty-Five, Entitled "The Central Bank Act"
Presidential Decree No. 72
Summary of Presidential Decree No. 72 Amending the Central Bank Act
Responsibilities and Objectives (Section 1-2):
- The Central Bank of the Philippines (CB) is responsible for administering the monetary, banking, and credit system.
- Its objectives are to maintain internal and external monetary stability, preserve the international value and convertibility of the peso, and foster conditions for balanced and sustainable economic growth.
Monetary Board Composition and Powers (Section 5-15):
- The Monetary Board consists of 7 members: the CB Governor (Chairman), Secretary of Finance, Director General of NEDA, Chairman of Board of Investments, and 3 private sector representatives.
- The Board exercises the powers and functions of the CB, including issuing rules and regulations, appointing personnel (except the Governor), and authorizing expenditures.
- Board members are subject to disqualifications, withdrawal for personal interests, and liability for violations or negligence (Sections 7-8, 13, 15).
CB Governor and Deputy Governors (Sections 20-21):
- The Governor is appointed by the President for a 6-year term and chairs the Monetary Board.
- The Governor's salary is fixed by the Board with the President's approval (Section 20).
- The Governor appoints one Senior Deputy Governor and up to 5 Deputy Governors to assist in managing the CB (Section 21).
Data Collection and Training (Sections 23-24):
- The CB can request data from any person or entity and issue subpoenas for books and records (Section 23).
- The CB can sponsor training programs for its personnel and others in money and banking (Section 24).
Bank Supervision and Examination (Sections 25-34, 34-A):
- The CB has supervising and examining departments to oversee banking institutions, including government credit institutions (Section 25).
- Personnel are prohibited from conflicts of interest, accepting gifts, and disclosing confidential information (Section 27).
- Banks must pay annual fees to the CB based on their total assets to cover supervision costs (Section 28).
- The CB can appoint a conservator to take charge of a bank in financial distress (Section 28-A).
- The CB can take over insolvent banks and appoint a receiver or liquidator (Sections 29, 34).
- Administrative sanctions include fines up to 500 pesos per day, suspension of operations, and removal of directors/officers (Section 34-A).
Reporting and Auditing (Sections 37, 46):
- The CB must submit an annual report to the President and Congress on its condition, policies, and economic analysis (Section 37).
- The Auditor General appoints the CB's Auditor and staff, subject to Monetary Board approval (Section 46).
Exchange Rate and Currency (Sections 49-54, 67, 70-77, 79):
- The peso's par value can only be altered under specific circumstances with Presidential and Congressional approval (Section 49).
- The CB has sole authority to issue currency, which is legal tender (Sections 52-54).
- The CB maintains the peso's convertibility and takes action when its international reserve is threatened (Sections 67, 70).
- The CB can buy/sell gold and foreign exchange, impose exchange restrictions, and determine exchange rates (Sections 72-77, 79).
Credit Operations (Sections 87-91, 95):
- The CB can rediscount commercial and production credits up to 180 and 360 days, respectively (Section 87).
- The CB can grant advances against various collaterals, including government securities (Section 87).
- The CB can provide loans to long-term lending institutions and for bank mergers/consolidations (Section 88).
- The CB can provide emergency loans to banks during financial panics or distress (Section 90).
- The Monetary Board sets interest and rediscount rates for the CB's credit operations (Section 91).
- The CB can make provisional advances to the government up to 20% of its average annual income (Section 95).
Reserve Requirements and Interbank Settlements (Sections 100-107):
- Banks must maintain reserves against deposit liabilities, proportional to deposit volume (Section 100).
- The CB can require reserves against deposit substitutes, as defined (Sections 100, 100-A).
- Banks pay penalties for reserve deficiencies, which can lead to lending restrictions (Section 106).
- The CB provides interbank clearing facilities, and reserves serve as the basis for check clearing (Section 107).
Interest Rates and Charges (Sections 108-109):
- The Monetary Board ensures bank credit is not used for speculative purposes (Section 108).
- The Board can fix maximum interest rates banks can pay on deposits and deposit substitutes (Section 109).
- The Board can fix maximum interest rates banks can charge on loans, within usury law limits (Section 109).
- The Board can set maximum commissions, fees, and charges to avoid interest rate evasion (Section 109).
Government Deposits and Services (Sections 118, 121):
- The CB is the official depository for the government, its subdivisions, and instrumentalities (Section 118).
- The CB does not charge for services to the government but can pay interest on government deposits (Section 121).
Personnel and Civil Service (Sections 132):
- CB appointments follow the Civil Service Law, except for policy-determining, confidential, or highly technical positions (Section 132).
- CB personnel cannot engage in partisan activities or elections, except voting (Section 132).
- CB personnel subject to the Civil Service Law cannot be removed or suspended except for cause (Section 132).
Responsibilities and Objectives (Section 1-2):
- The Central Bank of the Philippines (CB) is responsible for administering the monetary, banking, and credit system.
- Its objectives are to maintain internal and external monetary stability, preserve the international value and convertibility of the peso, and foster conditions for balanced and sustainable economic growth.
Monetary Board Composition and Powers (Section 5-15):
- The Monetary Board consists of 7 members: the CB Governor (Chairman), Secretary of Finance, Director General of NEDA, Chairman of Board of Investments, and 3 private sector representatives.
- The Board exercises the powers and functions of the CB, including issuing rules and regulations, appointing personnel (except the Governor), and authorizing expenditures.
- Board members are subject to disqualifications, withdrawal for personal interests, and liability for violations or negligence (Sections 7-8, 13, 15).
CB Governor and Deputy Governors (Sections 20-21):
- The Governor is appointed by the President for a 6-year term and chairs the Monetary Board.
- The Governor's salary is fixed by the Board with the President's approval (Section 20).
- The Governor appoints one Senior Deputy Governor and up to 5 Deputy Governors to assist in managing the CB (Section 21).
Data Collection and Training (Sections 23-24):
- The CB can request data from any person or entity and issue subpoenas for books and records (Section 23).
- The CB can sponsor training programs for its personnel and others in money and banking (Section 24).
Bank Supervision and Examination (Sections 25-34, 34-A):
- The CB has supervising and examining departments to oversee banking institutions, including government credit institutions (Section 25).
- Personnel are prohibited from conflicts of interest, accepting gifts, and disclosing confidential information (Section 27).
- Banks must pay annual fees to the CB based on their total assets to cover supervision costs (Section 28).
- The CB can appoint a conservator to take charge of a bank in financial distress (Section 28-A).
- The CB can take over insolvent banks and appoint a receiver or liquidator (Sections 29, 34).
- Administrative sanctions include fines up to 500 pesos per day, suspension of operations, and removal of directors/officers (Section 34-A).
Reporting and Auditing (Sections 37, 46):
- The CB must submit an annual report to the President and Congress on its condition, policies, and economic analysis (Section 37).
- The Auditor General appoints the CB's Auditor and staff, subject to Monetary Board approval (Section 46).
Exchange Rate and Currency (Sections 49-54, 67, 70-77, 79):
- The peso's par value can only be altered under specific circumstances with Presidential and Congressional approval (Section 49).
- The CB has sole authority to issue currency, which is legal tender (Sections 52-54).
- The CB maintains the peso's convertibility and takes action when its international reserve is threatened (Sections 67, 70).
- The CB can buy/sell gold and foreign exchange, impose exchange restrictions, and determine exchange rates (Sections 72-77, 79).
Credit Operations (Sections 87-91, 95):
- The CB can rediscount commercial and production credits up to 180 and 360 days, respectively (Section 87).
- The CB can grant advances against various collaterals, including government securities (Section 87).
- The CB can provide loans to long-term lending institutions and for bank mergers/consolidations (Section 88).
- The CB can provide emergency loans to banks during financial panics or distress (Section 90).
- The Monetary Board sets interest and rediscount rates for the CB's credit operations (Section 91).
- The CB can make provisional advances to the government up to 20% of its average annual income (Section 95).
Reserve Requirements and Interbank Settlements (Sections 100-107):
- Banks must maintain reserves against deposit liabilities, proportional to deposit volume (Section 100).
- The CB can require reserves against deposit substitutes, as defined (Sections 100, 100-A).
- Banks pay penalties for reserve deficiencies, which can lead to lending restrictions (Section 106).
- The CB provides interbank clearing facilities, and reserves serve as the basis for check clearing (Section 107).
Interest Rates and Charges (Sections 108-109):
- The Monetary Board ensures bank credit is not used for speculative purposes (Section 108).
- The Board can fix maximum interest rates banks can pay on deposits and deposit substitutes (Section 109).
- The Board can fix maximum interest rates banks can charge on loans, within usury law limits (Section 109).
- The Board can set maximum commissions, fees, and charges to avoid interest rate evasion (Section 109).
Government Deposits and Services (Sections 118, 121):
- The CB is the official depository for the government, its subdivisions, and instrumentalities (Section 118).
- The CB does not charge for services to the government but can pay interest on government deposits (Section 121).
Personnel and Civil Service (Sections 132):
- CB appointments follow the Civil Service Law, except for policy-determining, confidential, or highly technical positions (Section 132).
- CB personnel cannot engage in partisan activities or elections, except voting (Section 132).
- CB personnel subject to the Civil Service Law cannot be removed or suspended except for cause (Section 132).