After reading Minimum Requirements For The Governance And Risk Management System For Credit Card Operations Of Banks, read also Scope and Coverage of Republic Act No. 10870 or The Philippine Credit Card Industry Regulation Law
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Credit card issuer refers to a bank or a corporation that offers the use of its credit card
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All credit card issuers must have adequate financial strength and fit and proper board management
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Credit card issuers must demonstrate technical and risk management capability to operate a credit card business
Credit card issuer refers to a bank or a corporation that offers the use of its credit card.
A duly incorporated bank of good standing which intends to engage in credit card business, may operate as a credit card issuer provided that it submits the following requirements:
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Notice to the appropriate department of the Supervision and Examination Sector (SES) that the bank will engage in credit card operations; and
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Certification under oath executed by the president or officer of equivalent rank of the bank that it has complied with the relevant risk management standards set out under the Manual of Regulations for Banks (MORB), including among others, Credit and Information Technology Risk Management.
To effectively deliver services, banks must have adequate financial strength, fit and proper board and management and must demonstrate technical and risk management capability to operate a credit card business.
Banks shall establish a risk governance framework that includes policies, supported by appropriate processes and control procedures, designed to ensure that the risk arising from credit card operations are identified, aggregated, monitored and mitigated.
What shall the risk management and control systems on credit card operations cover?
The law says:
At the minimum, the risk management and control systems on credit card operations shall cover:
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Policies, procedures and management information systems for credit card operations. These shall include limits and thresholds on exposures considering the bank’s approved credit risk appetite;
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Organizational set up and the corresponding roles and responsibilities of personnel in the unit handling the credit card business;
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Approach to identifying, assessing, aggregating, monitoring, and reporting risks arising from credit card operations using appropriate risk management tools. This shall likewise include risk mitigation strategies and tools for maintaining risks within thresholds and limits set; and
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Internal audit and other independent review of credit card operations.
What are the minimum requirements for the governance and risk management system for the issuance of credit cards? A related article will be posted in a few days.
Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.
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