The Monetary Board approved the circular detailing the guidelines that would require top officials of SLAs to comply with the BSP’s fit and proper rules, aligning the associations with general banking rules.
According to BSP Deputy Governor Alberto V. Reyes, the MB decision was prompted by the controversy over the Police Savings and Loan Association (POSLAI) which was ordered closed by the courts in December after a string of anomalies involving misuse of association funds.
"We want to avoid similar incidents from happening in the future," Reyes said. "We also want to professionalize this sector."
Under the guidelines approved by the MB, the members of the board of trustees of non-stock SLAs would be required to comply with the fit and proper requirements of the BSP, including the qualifications defined under the General Banking Law.
Reyes said non-stock SLAs would also be required to create audit committees that would examine their financial condition on a regular basis as well as the conduct of an annual assessment of performance.
The disqualification rules applicable to banks, including watchlisting, would also apply on non-stock-SLAs. "This means that any person who has been disqualified would be put in a watchlist maintained by the BSP," he said.
Reyes said the guidelines were expected to clean up the ranks of SLAs which have figured in a number of controversies recently. "The BSP had no authority in the past to shut down SLAs that are violating rules and regulations, but we can ensure that officers of these associations are fit and proper," Reyes said.
Reyes said the MB decision was an offshoot of the policy review that the BSP conducted following the POSLAI closure by the Manila Regional Trial Court.
The closure order stemmed from the complaint filed by Peter Ignacio, a retired Manila policeman.
According to court records, Ignacio had a total of P12 million invested in POSLAI, including a P1.5-million time deposit, which the financial institution allegedly failed to return.
Ignacio is among 26,000 depositors who reportedly failed to get their money back from POSLAI.
Retired police colonel Felicisimo G. Lazaro, president of the Manila‚s Finest Retirees Association, Inc., said POSLAI owes them at least P37 million.
Lazaro was quoted as saying that POSLAI members invested their money in the association on the belief that they could use it upon their retirement but POSLAI could not explain where their money went.
POSLAI’s top officials were charged with estafa, namely chairman and president Vicente Palmon, a retired police colonel; vice chairman Reynaldo Li, a retired SPO3; Vicente Ray Palmon III, Cesar A. Baria, Armando G. Inabangan, Radito L. Perez; Felix J. Pineda; Cesario M. Tubog; Danilo F. Fernandez, and Yolanda Sales.