Republic of the Philippines IS RECEIVED
HOUSE OF REPRESENTATIVES IS pare FEB 04 202s!
Quezon City Be ALT
6 Tus GO PM
NINETEENTH CONGRESS Ko a
Third Regular Session e/
House Bill.No. 11424

Introduced by Representative Ron P. Salo

EXPLANATORY NOTE

Overseas Filipinos play a crucial role in the economic development of the
Philippines through their significant remittances, which sustain millions of Filipino
families and contribute to the country's financial stability. Despite their contributions,
many Overseas Filipinos face challenges in accessing efficient, secure, and affordable
banking services. It is imperative for the government to establish financial institutions
that specifically cater to their needs, ensuring seamless banking transactions and
financial empowerment.

In 2020, the Land Bank of the Philippines (LBP) launched the OFBank as the
country's first digital-only, branchless goverment bank, enabling global access to
banking transactions. The OFBank Citizen's Charter envisioned it as the leading OFW-
centric digital bank by 2024, offering stronger financial capabilities and secure
services, in line with the Philippine Development Plan 2017-2022's focus on financial
inclusion and efficient delivery of microfinance and micro-insurance. However, despite
the advancements made by the OFBank, there remain gaps in fully meeting the
diverse financial needs of Overseas Filipinos.

This proposed measure, entitled the "Overseas Filipino Bank Act,” provides a
revised Charter for the Overseas Filipino Bank (OFBank), solidifying its status as a
dedicated government financial institution that will address the banking and financial
needs of Overseas Filipinos and their families. The Act aims to institutionalize a digital
bank designed to facilitate cost-effective remittances, accessible credit facilities, and
enhanced financial services, consistent with the State's policy of recognizing the
invaluable contributions of Overseas Filipinos to national development.

The bill aims to serve the financial needs of Overseas Filipinos, including
Overseas Filipino Workers (OFWs), Retuming Overseas Filipinos (ROFs), dual
citizens, emigrants, immigrants, students studying abroad, and OFW families and
dependents. It mandates accessible and low-cost remittance services, credit and
financial assistance programs, and competitive banking products tailored for the
Overseas Filipinos’ needs. The bill sets an authorized capital stock of ten billion pesos,
with at least 50% of its subscription reserved for Overseas Filipinos and their families,
and the remainder reserved for the government. The OFBank is empowered to provide
loans, savings, investments, insurance, and foreign exchange services, while its
income shall fund welfare, reintegration and related programs for Overseas Filipinos.

Page 1 of 8 ~~



Governed by a nine-member Board of Directors, including representatives from the
government, Overseas Filipinos, and the private sector, the OFBank will operate under
Bangko Sentral ng Pilipinas (BSP) regulations, ensuring transparency, security, and
global accessibility.

Furthermore, this measure of providing for a revised charter seeks to solidify
OFBank’s status as an independent financial entity. This ensures its long-term
sustainability, autonomy in financial operations, and ability to offer a wider range of
financial products tailored for Overseas Filipinos. By institutionalizing the OFBank
through legislation, the government safeguards its ability to maintain an efficient and
financially stable institution that can cater to the unique needs of its clientele.

This proposed legislation is a timely and necessary measure to institutionalize
financial inclusion for Overseas Filipinos, strengthen the remittance market, promote
digital banking solutions, and ensure that the economic contributions of Overseas
Filipinos are reinvested for their welfare and development.

In view of the foregoing, the immediate passage of this bill s earnestly sought.

RON P. SALO
KABAYAN Party List

Page 2 of 8


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

NINETEENTH CONGRESS
Third Regular Session

House Bil N6, 11424

Introduced by Representative Ron P. Salo

AN ACT PROVIDING FOR THE REVISED CHARTER OF THE OVERSEAS
FILIPINO BANK, PROVIDING FUNDS THEREFOR, AND FOR OTHER
PURPOSES

Section 1. Short Title. — This Act shall be known as the “Overseas Filipino
Bank Act.”

Sec. 2. Declaration of Policy. — It is hereby declared the policy of the State
to recognize the invaluable contributions of Overseas Filipinos to the nation's
economic growth and social development. In pursuit of this, the government shall
ensure their financial well-being by promoting accessible, cost-effective, fast, and
secure remittance systems for both senders and recipients. The State shall also
enhance credit facilities and financial assistance programs to support enterprise
development and personal needs of Overseas Filipinos and their families.
Furthermore, the government shall strengthen its presence in the remittance market
to foster competitiveness and drive down remittance costs for the benefit of Overseas
Filipinos and their beneficiaries.

Sec. 3. Name, Place of Business, and Physical Touchpoints. — There is
hereby created the Overseas Filipino Bank, a digital bank that offers products and
services that are processed end-to-end through a digital platform and/or electronic
channels. It shall hereinafter be referred to as the OFBank.

It shall maintain a principal/head office in the Philippines to serve as the main
point of contact for stakeholders, including the Bangko Sentral and other regulators,
and shall house the offices of management and support operations. As a digital bank,
it may offer financial products and services through cash agents and other qualified
service providers, subject to existing laws, rules, and guidelines by the Bangko Sentral
ng Pilipinas (BSP) and in foreign countries it will operate. The OFBank may establish
physical touchpoints in any part of the Philippines or abroad upon approval of its Board
of Directors.

Sec. 4. Primary Functions of the Bank. — As a government financial
institution dedicated to addressing the financial needs of the Overseas Filipinos, the

OFBank shall:
a. Develop financial services and instruments for the Overseas Filipinos,
including migrant workers, both land-based and sea-based, Returning

Page 3 of 8


Overseas Filipinos (ROFs), dual citizens, emigrants, immigrants, students
studying abroad, and OFW families and dependents.

b. Ensure that all Overseas Filipinos have access to the financial services and
instruments of the bank.

c. Ensure that the cost of its services and facilities, including remittances, are
kept at the bare minimum.

Sec. 5. Powers in General. — The OFBank, upon its organization, shall be a
corporate body and shall have the power:

a. To prescribe, repeal, and alter its own by-laws and its operating policies,
and to issue such rules and regulations as may be necessary to achieve
the main purpose for the creation of the OFBank;

. To adopt, alter and use a corporate seal;

. To make contracts;

|. To sue and be sued;

To borrow money;

To own real or personal property and introduce improvements thereon,

and to sell, mortgage or otherwise dispose of the same;

To employ officers and personnel, preferably from the OFs sector, as

may be necessary to carry overseas Filipinos banking business;

h. To establish physical touchpoints in the Philippines as may be necessary
to carry on its overseas Filipinos banking business;

i. To perform any or all of the following banking services:

i. Grant loans, whether secured or unsecured;
ii. Accept savings and time deposits, including basic deposit
accounts as defined in the Manual of Regulations for Banks

(MORB);

iii. | Accept foreign currency deposits, as defined under Republic Act
No. 6426, as amended;

iv. Invest in readily marketable bonds and other debt securities,
commercial papers and accounts receivable, drafts, bills of
exchange, acceptances or notes arising out of commercial
transactions;

v. Act as correspondent for other financial institutions;

vi. Act as collection agent for non-government entities;

vii. Issue electronic money products subject to the guidelines
provided under the MORB;

viii. Issue credit cards;
ix. _ Buy and sell foreign exchange; and
x. Present, market, sell and service microinsurance products
subject to the guidelines provided under the MORB.

j. To exercise the powers granted under this Charter, including incidental
powers as may be necessary to carry on its business, subject to existing
laws, rules, and guidelines as may be established by the BSP.

k. To exercise the general powers mentioned in Republic Act No. 11232,
otherwise known as the Revised Corporation Code of the Philippines
and Republic Act No. 8791, otherwise known as the General Banking
Law of 2000, in so far as they are not inconsistent or incompatible with
the provisions of this Act.

m@aog

Page 4 of 8


The OFBank may offer savings accounts only for safekeeping or custody with
no participation in profit and losses except unless otherwise authorized by the account
holders to be invested.

Sec. 6. Authorized Capital Stock. — The authorized capital stock of the
OFBank shall be Ten billion pesos (P10,000,000,000) divided into one hundred million
par value shares of One hundred pesos each. All shares are nominative and
indivisible. The Board of Directors and stockholders are hereby authorized to increase
the authorized capital stock and provide the classification and features of shares,
subject to pertinent laws and the rules and regulations of the BSP and Securities and
Exchange Commission (SEC).

The subscription to and ownership of such shares, including the transfer thereof
to third parties, shall be governed by pertinent laws, rules, and regulations; Provided,
That at least fifty percent (50%) of the authorized capital stock shall be subscribed by
the Government of the Republic of the Philippines, while the remaining fifty percent
(50%) shall be made available for subscription exclusively to Overseas Filipinos and
their families and dependents.

Sec. 7. Utilization of Income for the Benefit of Overseas Filipinos. — The
income generated by the OFBank shall be utilized exclusively to fund programs,
projects, and services aimed at enhancing the welfare and development of Overseas
Filipinos including Overseas Filipino Workers (OFWs), Returning Overseas Filipinos
(ROFs), dual citizens, emigrants, immigrants, students studying abroad, and OFW
families and dependents and their families.

The income shall be dedicated to the following programs, but not be limited to:

1. Reintegration Support - Programs for livelihood, entrepreneurship, and

financial assistance for returning Overseas Filipinos.

2. Education and Welfare Assistance - Scholarships, skills training, and

emergency aid for dependents and families of Overseas Filipinos.

3. Financial Literacy and Empowerment - Initiatives that promote responsible

financial management and investment opportunities for beneficiaries.

4. Crisis and Legal Support - Aid for Overseas Filipinos in distress, including

repatriation, legal representation, and counseling.

5. Other programs consistent with this provision as approved by the Board of
Directors.

Sec. 8. Loans, Investments, and Liabilities. - The OFBank is hereby
authorized:

a. To grant loans, advances, or other credit accommodations for the
establishment, rehabilitation, expansion, or development of any agricultural,
commercial or industrial enterprise, or personal service, including public
utilities, in accordance with Republic No. 8791, the BSP rules and regulations,
and under such terms as may be prescribed by the Board of Directors and that
preference be given to applicants enumerated under Section 7 hereof, subject
to pertinent BSP rules and regulations;

b. To invest in stocks and other investment instruments subject to Republic Act
No. 8791, and the BSP rules and regulations;

Page 5 of 8


c. To issue bond and other certificates of indebtedness subject to Republic Act
No. 8791, and the BSP rules and regulations.

Sec. 9. The Board of Directors, Composition, Tenure, and Per Diems. —
The Board of Directors, hereinafter referred to as the Board, shall consist of nine (9)
members to be appointed by the President of the Philippines. The term of office of the
Chairperson, President, and the members of the Board shall be for a period of one
year or until such time as their successors are appointed. The Board shall direct the
affairs and business of the OFBank shall manage, control, and preserve its properties,
unless otherwise provided in this Act.

The Chairperson of the Board, and the President of the OFBank, who shall
serve as Vice Chairperson, shall be appointed by the President of the Philippines. The
position of Chairperson of the Board and President of the OFBank shall not be held
by the same person. In case of incapacity or absence of both the Chairperson and the
Vice-Chairman, the Board of Directors shall designate a temporary Chairperson from
among its members.

The Secretary of Finance, Secretary of Migrant Workers, and the Secretary of
the Commission on Filipinos Overseas shall serve as ex officio members of the Board.
As such, they may designate their respective alternates who shall be the officials next-
in-rank to them and whose acts shall be considered the acts of their principals.

No person shall be appointed regular director of the OFBank unless he/she is
a natural-born citizen of the Philippines, not less than thirty-five (35) years of age, of
good moral character and has attained proficiency, expertise and recognized
competence in one or more of the following: banking, finance, economics, law, foreign
affairs, business management or government administration.

Four (4) of the members of the Board shall be independent directors composed
of one (1) representative from the private sector, one (1) representative from land-
based OFWs, one (1) representative from sea-based OFWs, and one (1)
representative from overseas Filipinos.

Except for the Chairperson and the President, no officer or employee of the
Bank may be appointed as a member of the Board of Directors; nor shall any director,
officer or employee of any other bank be eligible as a member of the same.

The Board, shall upon a majority vote of all its members, elect its chairperson,
vice-chairperson, and secretary, at such time and place as shall be provided for in its
by-laws.

The members of the Board, except for those serving ex officio, shall receive a
per diem or allowance for every meeting of the board actually attended by them, the
amount of which shall be within the acceptable banking industry rates and shall be set
in accordance with the pertinent provisions of Republic Act No. 11232.

Sec. 10. Powers and Functions of the Board of Directors. — The Board of
Directors shall:

Page 6 of 8


a. Formulate policies necessary to carry out effectively the provisions of
this Act and adopt such by-laws, rules and regulations for the effective
operation of the OFBank in conformity with this Act and other existing
laws;

b. Determine the organization of the OFBank by creating the necessary
departments or offices essential for its efficient operation;

c. Subject to prior approval of the Monetary Board, establish physical
touchpoints in other countries; and

d. Create an executive committee and such other committees as may be
deemed necessary and proper in the conduct of the business of the
corporations, with composition, powers and duties as it may prescribe,
‘subject to BSP rules and regulations, and act on all matters affecting the
general policies of the OFBank.

Sec. 11. Chairperson and Chief Executive Officer. — The Chairperson shall
be the Chief Executive Officer of the OFBank, which shall have the direction and
control of its business affairs and properties in all matters which are not explicitly stated
to be done by the Board or other offices of the bank in this Charter or by the By-Laws
of the bank. For this purpose, the Chairperson shall, among other powers and duties,
execute, carry out, and administer the policies, measures, orders, and resolutions
approved by the Board; direct and supervise the operation and administration of the
Bank; and exercise such other powers and perform such other functions or duties as
may be directed or assigned to him/her by law or by the Board from time to time.

Particularly, the Chairperson shall have the power and duty:

a. To sign and execute all contracts concluded by the Bank and enter
into all necessary obligations required or permitted by this Act, upon proper
authorization by the Board; and sign all notes, securities, certificates, and other
major documents of the bank;

b. To exercise, as Chief Executive Officer of the Bank, the powers of
control and supervision over decisions and actions of subordinate officers and
all other powers that may be granted by the Board;

c. To report monthly to the Board on the operations of the Bank and
propose policies for the efficient, effective and economical operation of the
Bank;

d. To submit an annual report to the President of the Philippines on the
result of the operations of the bank;

e. To recommend to the Board the appointment, promotion, or removal
of all officers of the bank, with the rank of at least vice-president or its
equivalent;

f. As required by circumstances, to delegate any of his powers, duties or
functions to any officer or director of the bank, with the approval of the Board.

Sec. 12. Vice Chairperson and Chief Operating Officer. — The Vice
Chairperson shall be the Chief Operating Officer of the Bank and shall assume and
exercise such specific duties and responsibilities as may be delegated to him by the
Chairman.

Sec. 13. Legal Counsel. — The OFBank shall have its own legal department,
the chief of members of which shall be appointed by the Board of Directors. The Board

Page 7 of 8


may engage the professional services of private external legal counsel whenever
deemed necessary.

Sec. 14. Bank Auditor Reports. — The OFBank shall have its own auditing
department, the head of which shall be appointed by the Board of Directors preferably
from among recognized veterans or their heirs of good standing who are certified
public accountants and with actual experience in the work of a comptroller or auditor.
The auditor shall not suffer any diminution in salary during the auditor's term of office,
and may not be removed except for cause.

Sec. 15. Conduct of Business. — The OFBank shall be subject to the
prudential requirements set out by the BSP including corporate governance and risk
management, particularly on information technology and cyber security, outsourcing,
consumer protection and anti-money laundering (AML) and combating the financing
of terrorism (CFT), as provided under existing regulations.

Sec. 16. Authority to Receive Deposit of Government Funds as an Official
Government Depository. — The Secretary of Finance, the National Treasurer, and
their authorized representatives, all city and municipal treasurers as well as official
custodians of public funds, or those belonging to government-owned or controlled
corporations are hereby authorized, if they so desire, to make and actually maintain
deposits of any government or corporate fund with the OFBank, which is hereby
declared to be an official government depository.

Sec. 17. Appropriations. — The amount necessary for the implementation of
this Act shall be provided in the annual General Appropriations Act.

Sec. 18. Separability Clause. — If any provision or part hereof is held invalid
or unconstitutional, the remaining provisions not affected thereby shall remain valid
and subsisting.

Sec. 19. Repealing Clause. — Any law, presidential decree or issuance,
executive order, letter of instruction, administrative order, rule or regulation contrary to
or inconsistent with the provisions of this Act is hereby repealed, modified or amended
accordingly.

Sec. 20. Effectivity. — This Act shall take effect fifteen (15) days after its

publication in the Official Gazette or in any two (2) newspapers of general circulation
in the Philippines.

Approved,

Page 8 of 8