NBFIs told to pay supervision fees

Navigating the New Supervision Fee Landscape What Non-Bank Financial Institutions Need to Know

As non-bank financial institutions (NBFIs) continue to thrive in the Philippine financial landscape, it's essential for these entities to stay informed about the latest regulatory requirements. The Bangko Sentral ng Pilipinas (BSP) has introduced a new requirement for NBFIs with trust authority annual supervision fees. In this article, we'll break down what NBFIs need to know about these fees and provide guidance on how to navigate them successfully.

What are Non-Bank Financial Institutions?

Before diving into the details of the supervision fees, let's define what NBFIs are. These institutions offer a range of financial services, including lending, investing, risk pooling, and more, without accepting traditional deposits. Examples of NBFIs include pawnshops, insurance firms, investment houses, credit card companies, microfinance institutions, government agencies like SSS, GSIS, and Pag-IBIG, as well as private entities like GCash.

Understanding the Supervision Fee

The BSP has issued Circular No. 1228, which requires NBFIs with trust authority to pay an annual supervision fee equivalent to one-twentieth (1/28) of 1 percent of their average assessable assets from the previous year. Assessable assets refer to the total assets managed by an NBFI's trust department, excluding securities under custodianship.

Calculating the Fee

To calculate the fee, NBFIs need to determine their average assessable assets for the previous year. This involves summing up the month-end balances and dividing it by the number of months the NBFI was in operation during the assessment period.

What Happens if You Make a Mistake?

If an NBFI discovers an error in its calculation, it must submit exceptions and supporting documents at least 10 banking days before the payment deadline. Failure to do so may result in additional administrative sanctions.

Tax Withholding What NBFIs Need to Know

NBFIs do not need to withhold tax on their annual supervision fee payments. The BSP's income is exempt from national internal revenue taxes.

Payment Deadline and Consequences of Non-Payment

The supervision fee must be paid on or before May 31 of every year. Failure to pay the fee on time may result in administrative sanctions, including penalties, suspension or removal of directors or officers, or even revocation of the NBFI's authority to engage in the trust business. In extreme cases, the Solicitor General may initiate proceedings to dissolve the corporation.

Tips for NBFIs Staying Compliant and Avoiding Issues

To ensure a smooth transition and maintain compliance with regulatory guidelines, NBFIs should

1. Review and understand Circular No. 1228 Make sure you comprehend the requirements and calculations involved in determining your annual supervision fee.
2. Maintain accurate records Keep detailed records of your assessable assets to facilitate easy calculation and submission of your fees.
3. Submit exceptions and supporting documents promptly If you discover an error, don't hesitate to submit corrections and supporting documentation well ahead of the payment deadline.
4. Consult with professionals if needed If you're unsure about any aspect of the process, consider consulting with financial experts or legal professionals for guidance.

By following these tips and staying informed about the new supervision fee requirements, NBFIs can ensure a smooth transition and maintain their compliance with regulatory guidelines.

Edward Lance Arellano Lorilla

CEO / Co-Founder

Enjoy the little things in life. For one day, you may look back and realize they were the big things. Many of life's failures are people who did not realize how close they were to success when they gave up.