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The Monetary Board, in its Resolution No. 1925 dated November 16, 2017, approved the amendments to the following sections and appendix of the Manual Regulations  for  Banks  (MORB)  to  change  the  timelines  for  the  return  by  the Drawee  Bank  of dishonored  checks  to the  Presenting  Bank  under  the  Check Image Clearing System (CICS), and for the Bangko Sentral reverse repurchase (RRP) facility auction, as well as specify the start and cut-off time for settlement of interbank transactions with the Bangko Sentral during normal and abnormal conditions.

Section 1. Sections X202 and X203 of the MORB are hereby amended to read as follows:

“Sec. X202 Temporary Overdrawings; Drawings Against Uncollected Deposits. The following regulations shall govern temporary overdrawings and drawings against uncollected deposits (DAUDs).

a.     Temporary overdrawings.  Temporary overdrawings  against demand deposit account (DDA) shall not be allowed, unless caused by normal bank charges and other fees incidental to handling such accounts.

xxx

Technical overdrawings  arising from “force posting” in-clearing checks shall be  debited  by  banks  under  “Returned   Checks  and  Other  Cash  Items (RCOCI)” which is part of “Other Assets” in the Balance Sheet. Items to be lodged under this account shall consist only of in-clearing checks which may result in “technical overdrawn” accounts.

In case a check clearing item is dishonored, the Drawee Bank shall generate the pertinent electronic documents1 on the dishonored clearing item due to insufficiency  of funds and electronically  submit the same to the Presenting Bank within the prescribed period, or not later than the cut-off time indicated in Appendix 39 for returned items

Peso DDAs maintained by foreign correspondent  banks with UBs/KBs shall not be subject to the above-mentioned regulations: provided, That:

xxx

b.     DAUDs.  DAUDs  shall  be  prohibited  except  when  the  drawings  are  made against uncollected deposits representing manager’s/cashier’s/treasurer’s checks,  treasury  warrants,  postal  money  orders  and  duly  funded  “on  us” checks which may be permitted at the discretion of each bank.

“Sec. X203 Returned Checks.

a.     Checks without sufficient funds/with stop payment orders.

To  complement   the  provisions   of  Batas   Pambansa   Blg.  22,  (An  Act
Penalizing   the  Making   or  Drawing   and  Issuance   of  a  Check   Without

Sufficient  Funds  or  Credit),  the  following  regulations  shall  govern  checks drawn against insufficient funds and checks drawn against closed accounts:

(1)  xxx
(2)  xxx
(a)   xxx
(b)   xxx
(3 ) xxx
(4)  xxx

b.     Checks dishonored due to technical reasons. xxx

c.     The  Drawee  bank  shall  transmit  the electronic  documents^[1]  relative  to the dishonor to the Presenting Bank within the prescribed period or not later than the cut-off time indicated  in Appendix  39 for returned  items in accordance with the following procedures:

(1) The settlement  of interbank  transactions  vis-à-vis  covering  reserve requirement/deficiency  of banks’ DDA is shown in Appendix 39.

(2) The  AM  clearing  window  for  clearing  items  dishonored  due  to insufficiency of funds or credit, technical reasons, closed account and/or stop payment order shall be conducted from 4:31 PM of the same day up to the cut-off time indicated in Appendix 39 for returned items.

(3)  xxx”

Section 2. Appendix 39 on Settlement of Interbank Transactions vis-à-vis Covering  Reserve  Requirement/Deficiency  of Banks’ Demand  Deposit  Account with  the  Bangko  Sentral  (Appendix  to  Secs.  X202  and  X203)  of  the  MORB (attached as Annex A") is also amended to indicate the changes in the timelines.

Section  3. Effectivity.  This Circular  shall take effect fifteen  (15) calendar days  after  publication  in  the  Official  Gazette  or  in  a  newspaper  of  general circulation.

FOR THE MONETARY BOARD: