BSP allows microfinance-oriented banks to shift to regular operations

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THRIFT banks and rural banks in the business of microfinance may soon convert their branches into regular branch banking operations after the Monetary Board, the central bank’s policy-setting body, amended a provision in the industry’s regulatory manual.

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In Resolution 1855 dated October 13, 2016, the Monetary Board amended the Subsec. X102.5 of the Manual of Regulation for Banks (MORB) giving microfinance-oriented thrift banks (TBs) and rural banks (RBs) the authority to covert their microfinance-oriented branches into regular branches.

The authorization is given provided banks comply with the requirements of a regular TB/RB license.

The lenders need to show a certificate signed by the president or officer of equivalent rank stating the allocation of at least 50 percent of the gross loan portfolio to microfinance is no longer feasible due to shifts in market condition.

Aside from copies of a strategic plan and business strategy on converting into a regular bank, the certification must be supported by a market study citing, among others, changes in demographic, social, and economic factors.

The lender must also provide a certified true copy of the resolution of its board of directors authorizing the conversion of the microfinance-oriented bank into a regular bank.

“The bank must also change its business name to reflect its reclassification to a regular bank,” according to the Monetary Board.

“This Circular shall take effect fifteen calendar days following its publication either in the Official Gazette or in a newspaper of general circulation,” it added.

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