The Market Monitor Minding the Nation's Business
By Riza Lozada
The Bangko Sentral ng Pilipinas (BSP) has allowed the creation of personal management trust (PMT) accounts and relaxed the requirements for foreign loans obtained by non-banks with quasi-banking functions (NBQBs) in a move to spur more savings and investments.
In line with its policy to develop the fiduciary business, the BSP instituted the series of trust reforms to promote a more responsive climate in the financial services industry.
BSP Governor Amando Tetangco Jr. said the PMT is a welcome addition to the wide array of trust products offered in the market, and is deemed very timely, considering that one-person households in Asia, including in the Philippines, have become prevalent.
PMT is a living trust arrangement that seeks to meet the estate-planning and asset-management needs of individuals who are allowed to open such an account for a minimum amount of P100,000.
It aims to manage and preserve the account holder’s funds and properties to answer for current or future needs of the designated beneficiaries.
The trust fund is expected to address the clamor of the market, especially those who are not capable or don’t see the need of appointing third-party beneficiaries.
PMT is seen as a more flexible tool in the management of an individual’s financial affairs, unlike the living trust account (LTA), which has a strict requirement on third-party beneficiaries.
According to the BSP, LTAs will be discontinued, while all existing and valid LTAs will automatically be considered as PMTs to provide a smooth transition.
Tetangco also said the policy-making Monetary Board (MB) has approved the lifting of prior BSP approval and registration requirements for loans to be obtained by NBQBs from offshore sources and banking units, and the foreign currency deposit units of banks.
The effectivity of the order will be on Sept. 15, together with other liberalization measures for the foreign-exchange market that are being introduced by the country’s monetary authorities.
The new policy will facilitate NBQBs’ borrowing transactions to fund their operations and projects for economic growth.
Tetangco said “policy reforms will continue to be studied and adopted, as appropriate, given prevailing conditions, as well as projected trends and developments onshore and offshore.”