Philippine 100 peso bill (Photo credit: Wikipedia)Financial IQ Philippines Quick Hit(s):
If an investment return is too good to be true, it most likely is. It is better to avoid getting into such investment instrument.
The Bangko Sentral ng Pilipinas (BSP) cautioned investors seeking higher returns amid the low interest rate regime in the country.
BSP Central Supervisory Support Sub-sector managing director Johnny Noe Ravalo said in an interview that investors should know what they are getting into before investing their hard earned savings.
“In a low interest rate environment, our reminder is that investment is a process,” Ravalo stressed.
The BSP has so far slashed interest rates by 50 basis points due to the benign inflation outlook as well as the fragile global economic growth. This brought the overnight borrowing rate back to a record low of four percent and the overnight lending rate to six percent.
Likewise, the yield on government securities including retail treasury bonds, Treasury bills (T-bills) and Treasury bonds (T-bonds) continued to remain low on the back of the country’s sound macroeconomic fundamentals and improving fiscal position.
Ravalo said investments in the Philippines particularly contracts governing the sale of securities are covered by the Securities Regulation Code but offshore investments are not covered by law as these involve jurisdiction issues.
“Don’t just invest abroad, know the details of the contracts you are entering into,” he reminded investors.
He explained that the BSP is now drafting a bill that would be submitted to the Committee on Banks and Financial Intermediaries of the House of Representatives.
According to him, the proposed bill would involve a resolution mechanism by determining the market and credit risks as well as operational risks.
Likewise, the BSP lauded the efforts of the Trust Organization Association of the Philippines (TOAP), and the Fund Managers Association of the Philippines (FMAP) to come up with a code of conduct that would govern all their members.
Latest data from the BSP showed that the central bank’s Financial and Consumer Affairs Group (FCAG) has resolved 99.5 percent or 11,611 of the total 11,664 complaints filed by financial consumers against banks and other institutions since 2006.
The number of complaints filed before FCAG posted a 20-fold increase to 11,664 as of 2011 from only 158 in 2006.
About 30 percent or 3,487 of the total complaints filed since 2006 involved credit cards such as unfair collection practices, excessive charges, and requests for debt restructuring.
On the other hand, about 28 percent or 3,300 of the total complaints filed since 2006 involved bank deposits such as concerns on withdrawals, tracing as well as verification of deposits while four percent or 1,552 involved lending transactions such as interest charges and collection practices.
http://www.philstar.com/Article.aspx?articleId=797345&publicationSubCategoryId=66
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