what is a quasi bank

The SEC has authority over financing institutions under the Financing Company Act of 1998
which defined financing companies as “corporations except banks, investment houses, and
other financial institutions organized or operating under other special laws which are primarily
organized for the purpose of extending credit facilities to consumers xxx”
1
.
The authority of BSP over non-bank financing institutions are limited, applying only to those
exercising quasi-banking activities as stated its functions and responsibilities.
2
The authority of
the BSP stretches over a financing institution, if its resources for lending are from funds
borrowed from 20 or more lenders for the borrower’s own account through issuances,
endorsement, or assignment with recourse or acceptance of deposit substitutes for purposes of
re-lending, purchasing receivables and other obligations as stated in Sec. 9 of RA 8556
3
, stating
that should the financial institutions engage in quasi-banking acts, it requires prior approval of
the BSP.
Also, if the financing institution is a subsidiary of a bank or quasi-banking institution, authority
over it falls under the Bangko Sentral ng Pilipinas under Sec. 25 of the New Central Bank Act.
4

To operate as a financing company it must comply with the Requirements of Registration as
stipulated n both RA 8556 and its implementing rules.
Another organization that looks over the transactions of financing institutions are Financial
Stability Coordinating Council which was just formally launched this 2014
5
but was projected as

1
Rules and Regulations to Implement the Provisions of RA 8556 (Retrieve at
http://www.sec.gov.ph/investorinfo/irr/IRR-R.A.8556.pdf)

2
Overview of Functions and Responsibilities (Retrive at http://www.bsp.gov.ph/about/functions.asp)


3
An Act Amending RA 5890, As Amended, otherwise known as the Financing Company Act, (Retrieve at
http://www.bsp.gov.ph/downloads/laws/RA8556.pdf)

4
Sec. 25, RA 7653, (Retrieve at http://www.lawphil.net/statutes/repacts/ra1993/ra_7653_1993.html)

5
PHL Finance Bodies sign agreement creating Financial-stability Council, 29 January 2014 (Retrieve at
http://www.businessmirror.com.ph/index.php/en/business/banking-finance/26709-phl-finance-bodies-sign-
agreement-creating-financial-stability-council)


early as 2012 to be that organization to work closely with the SEC to help regulate in-house
financing schemes.
6



6
BSP to regulate in-house funding schemes, 8 October 2012 (Retrieve at http://business.inquirer.net/85976/bsp-
to-regulate-in-house-funding-schemes)