Saturday, December 20, 2008 Exec, traders blame BSP on bank holiday By Victor L. Camion
REPRESENTATIVE George Arnaiz (2nd District, Oriental Negros) blamed the Banko Sentral ng Pilipinas (BSP) for failure to monitor rural banks under the Legacy group.
The BSP has supervision over the operations of banks, as well as on exercises such regulatory powers as provided in the New Central Bank Act and other pertinent laws over the operations of finance companies and non-bank financial institutions performing quasi-banking functions.
Arnaiz said safeguards should be put in place to avoid a repetition of the bank holidays which affected small farmers.
The farmers are affected by the bank holidays because the depositors of the beleaguered rural banks are mostly farmers.
The legislator said he is filling a resolution in Congress calling for an investigation of the Legacy group, whose banks declared bank holidays without warning their clients.
In Negros Oriental, there are at least five branches of rural banks that declared holiday last week, excluding the Rural Bank of Subangdaku (RBS) in Dumaguete.
RBS-Dumaguete, which is not under the Legacy group, closed shop on December 12 to avoid bank run due to massive withdrawals.
Aside from Pilipino Rural (PR) Bank in Dumaguete, the two branches of Rural Bank of Bais (RBB) in Bais City and another branch in Tanjay City closed shop simultaneously on December 7.
Mayor Hector Villanueva said that even Sones Montenegro, the father of Paul Mentenegro, president of RBB, was also a victim of the bank holiday. Montenegro is one of the depositors of RBB.
The elder Montenegro, Villanueva said, has millions placed in the bank before it declared a bank holiday last week.
Alex Sy, president of the Filipino-Chinese Chamber of Commerce Inc. (FCCC), said the main reason to established rural banks is to help small farmers and small businessmen.
But these rural banks, he said, invested to losing companies. Some are investing on idle or non-performing properties, he said.
Roy Cang of Negros Oriental Chamber of Commerce and Industry (Nocci) said the bank holidays could not influence the entire economy of Dumaguete City but it can affect small businesses that placed their capital to the rural banks.
Sy blamed BSP for its failure to regulate the banks that offered tempting but unreasonable products to depositors.
Legacy's pre-need company has been offering another savings scheme that would double the money of investors within a period of three years, with the interest payable in checks.
