CBP Circular Letter

July 29, 1983 CBP CIRCULAR LETTER TO : All Thrift Banks It has come to the attention of the Central Bank that some thrift banks have placements/investments in non-registered commercial papers of finance companies which have no authority to engage in quasi-banking functions or to issue commercial papers and that these placements/investments are evidenced merely by official receipts. Official Receipts, being instruments used to evidence the receipt of money to liquidate an existing debt or an antecedent loan transaction should not evidence primary transactions such as placements of investments. Its use in the case of a loan/investment/placement instead of the appropriate documents is therefore considered irregular. Moreover, Section 2390 of Book II of the Manual of Regulations for Banks and Other Financial Intermediaries limits investments of thrift banks in bonds and other debt instruments to those which are registered with the Securities and Exchange Commission or have complied with the rules on registration of commercial papers issued by the Securities and Exchange Commission. All thrift banks are therefore enjoined to (a) limit their investments in commercial papers to readily marketable bonds and other debt securities which have complied with the rules on registration of commercial papers issued by the Securities and Exchange Commission and evidences of indebtedness which, although not readily marketable, are registered with the Securities and Exchange Commission and acquired with recourse against a bank or non-bank financial intermediary performing quasi-banking functions; and (b) execute or require appropriate documents such as promissory notes, repurchase agreements and certificates of participation, evidence of their lendings/investments/placements with banks and non-bank financial intermediaries, both for bank proper and trust transactions. (SGD.) JAIME C. LAYA Governor