Department Circular No. 003.2015 dated August 24, 2015, Amending Department Circular No. 001.2015 dated 1 June 2015 on the Revised Guidelines on Authorized Government Depository Banks

February 29, 2016 BLGF MEMORANDUM CIRCULAR NO. 006-16 TO : All Regional Directors of this Bureau; All Provincial, City and Municipal Treasurers; and All Others Concerned SUBJECT : Department Circular No. 003.2015 dated August 24, 2015, Amending Department Circular No. 001.2015 dated 1 June 2015 on the Revised Guidelines on Authorized Government Depository Banks This Memorandum Circular is issued to inform all concerned of the herein attached Department Circular No. 003.2015 dated 24 August 2015, published in the Manila Standard Today on 08 September 2015, amending Department Circular No. 001.2015 dated 01 June 2015 on the Revised Guidelines on Authorized Government Depository Banks. HTcADC The amendments read as follows: "xxx xxx xxx 6. TRANSITORY PROVISIONS 6.1 All NGAs, GOCCs or LGUs maintaining accounts with banks not compliant with the requirements of Section 5.2 except those allowed under Sections 5.3 and 5.4, shall have one (1) year from the effectivity of this Circular to transfer all funds and cash balances to a bank compliant with the provisions of Section 5.2 hereof. 6.2 During the period mentioned in Section 6.1, NGAs, GOCCs and LGUs may maintain existing accounts with a non-compliant bank but may not increases deposit balances beyond what they were as of the effectivity of this circular. 6.3 Once the period mentioned in Section 6.1 lapses and the bank is still unable to meet the requirements of Section 5.2, NGAs, GOCCs or LGUs may request the Department of Finance (DOF) to extend the transitory period by one (1) year, subject to the submission of a transition plan, for DOF's evaluation and approval. The request for extension must be submitted at least ninety (90) days before the end of the transitory period. DOF has until the last day of the transitory period to evaluate, and approve or disapprove the request. 6.4 If the NGAs, GOCCs or LGUs do not request for an extension, or if their request is disapproved by the DOF, the same must transfer all funds and cash balances to banks that meet the requirements of Section 5.2. xxx xxx xxx" Please be guided that the transitory period of one (1) year provided under Section 6.1 thereof is until 08 September 2016. However, the extended transitory period of one (1) year provided under Section 6.3 thereof is until 08 September 2017. Those LGUs availing of the extended transitory period are required to submit a transition plan to the DOF until 08 June 2016, for evaluation by the BLGF and subject to the approval of the Secretary of Finance. All concerned are hereby reminded to observe the compliance monitoring of this Bureau, pursuant to BLGF Memorandum Circular No. 01-2016 dated 18 January 2016, taking into account the amendment under Department Circular No. 003-2015. Strict compliance with the aforementioned guidelines is hereby enjoined. (SGD.) JOCELYN T. PENDON OIC-Executive Director ATTACHMENT DOF Department Circular No. 003-15 August 24, 2015. A Government Savings Bank Postbank Philippine Postal Savings Bank, Inc. February 11, 2016 Ms. Jocelyn T. Pendon OIC-Executive Director Bureau of Local Government Finance 8th Floor EDPC Building, BSP Complex, Roxas Boulevard, Manila 1004 Dear Executive Director Pendon, We are writing this letter because of an urgent concern brought about by the issuance of BLGF Memorandum Circular No. 01-2016, dated January 18, 2016, with the subject "LGU Compliance Monitoring re: Authorized Government Depository Banks per DOF Circular No. 001-2015 and DOF Circular No. 002-2015." We strongly believe that this circular will have material negative impact on the operations of the Philippine Postal Savings Bank, Inc. (Postbank), a 100% government-owned Bank authorized by the Monetary Board to accept government deposits, as well as other private banks maintaining government deposits, due to the following reasons: aScITE 1. The BLGF circular stated that the one (1) year deadline to transfer all government funds and cash balances to a compliant bank is on June 1, 2016. This directive refers to the provision of DOF Circular No. 002-2015, dated July 10, 2015, which set a one (1) year transitory period for the transfer of government deposits to a compliant bank, upon effectivity of the said circular. Hence, the reckoning date of the transitory period is on July 10, 2015 and will end a year after which is July 10, 2016. 2. The circular made no mention about the latest directive of the DOF, embodied in DOF Circular No. 003-2015, hereto attached, allowing National Government Agencies (NGAs), Government Owned and Controlled Corporations (GOCCs) and Local Government Units (LGUs) to maintain their deposit balances with a non-compliant bank for another one (1) year after the lapse of the transitory period, subject to the submission of a transition plan to the DOF. This circular was issued in August 24, 2015, thus, came out before BLGF Circular 01-2016. The omission of the above information from the BLGF circular might create an impression on the government instrumentalities that they have no other option but to follow the instruction to transfer their deposits to a compliant bank on or before June 1, 2016. Therefore, this will result to the early and unplanned withdrawal of government deposits from non-compliant banks, taking away the leeway granted by the DOF to said banks, which is intended to provide them enough adjustment period to implement the DOF circular. In the case of Postbank, we are now experiencing the effect of this BLGF directive as several of our LGU depositors, both through written and verbal communications, have expressed their intent to withdraw their deposits with Postbank earlier than they have planned. Please be advised also that we are coordinating with the Office of the DOF Secretary in meeting the requirements of DOF Circular No. 003-2015. Foregoing considered, we would like to strongly recommend that another circular be immediately issued indicating the correct deadline for the transitory period and stating pertinent provisions of DOF Circular No. 003-2015 specifically on the extension of the transitory period. We are recommending this not only to protect the Bank but to ensure transparency and fairness among the stakeholders in the implementation of the DOF circular. We will appreciate your prompt and favorable action on the matter. Thank you. Very truly yours, (SGD.) CESAR N. SARINO President and CEO BLGF Memorandum Circular No. 001-16 January 18, 2016.