BSP cites microbanking offices’ role in financial inclusion

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Growth in the number of micro-banking offices (MBOs) has contributed significantly to improved access to and usage of financial services in the Philippines, the central bank said.

In its latest report on the state of financial inclusion in the Philippines, the Bangko Sentral ng Pilipinas (BSP) said financial access has expanded in terms of number and reach of banks and other financial institutions.

Usage of financial services has also improved as seen in the growth of deposits, loans, microfinance, and electronic money, it said.

“For access, worth highlighting is the growth in micro-banking offices (MBOs), which are low-cost banking infrastructure that can be established in municipalities where it is not feasible to set up a regular branch,” the BSP said.


The central bank said regular branches continue to rise but they remain concentrated in Metro Manila. MBOs have therefore been more contributory to financial inclusion by extending the reach of financial services to underserved and unserved areas.

It noted that majority of MBOs are located in areas outside Metro Manila, particularly in the regions of Calabarzon (Cavite, Laguna, Batangas, Rizal and Quezon), Bicol, Western Visayas, and Mimaropa (Mindoro, Marinduque, Romblon and Palawan).

“Most municipalities that were previously unbanked are now enjoying access to banking services because of MBOs,” the BSP added.

It said there are 617 MBOs based on the latest available count as of June 2016, an increase of 93 percent from 320 MBOs as of June 2012.

The number of local governments units (LGUs) with MBOs grew by 105 percent to 393 LGUs in June 2016 from 192 LGUs in June 2012. To date, 75 municipalities are being served by MBOs alone.

MBOs increased at an average year-on-year rate of 18 percent, which is faster than the growth of other types of banking offices (4 percent) and automated teller machines (13 percent).

“When it comes to usage of basic savings accounts, there has been a remarkable growth in micro-deposits, which are specifically designed to [serve]the low-income sector,” the monetary authority said.

A micro-deposit account has a maintaining balance requirement of not more than P100, with an average daily balance requirement not exceeding P40,000. This deposit account does not have dormancy charges.

BSP said the number of micro-deposit accounts grew by 217 percent to 2.9 million accounts in June 2016 from just 925,389 accounts in June 2012.

It said the total amount of micro-deposits increased by 181 percent to P6.3 billion in June 2016 from P2.2 billion in June 2012. Micro-deposit accounts grew at an average year-on-year rate of 34 percent, which is faster than the growth of other deposit products (6 percent).

“While the environment for financial inclusion continues to improve, changes appeared to be gradual and slower in comparison with our peers,” the central bank said.

It cited data from the World Bank indicating that the share of Filipino adults with a formal account increased by 4.7 percentage points to 31.3 percent in 2014 from 26.6 percent in 2011, which appears modest compared to the improvement among lower middle-income countries which is 14 percentage points.

Recognizing that much work needs to be done, the BSP said it remains committed to nurturing an environment conducive to financial inclusion.

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