BSP expands MBOs’ financial inclusion role

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Micro-banking offices (MBOs) have been allowed to approve and open deposit accounts for clients with their allowable activities having been expanded as part of the Bangko Sentral ng Pilipinas’ (BSP) financial inclusion efforts.

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The central bank said on Tuesday that it had recently approved a measure that would enable MBOs to complete the process of account opening, from application up to the acceptance of initial deposit, provided that the necessary controls are in place.

MBOs are scaled-down offices that provide a specified range of activities and services, such as the acceptance of micro-deposits, disbursements of micro-loans, selling of microinsurance, purchase of foreign currency, bills payments, government pay-outs and e-money conversion.

MBOs were previously only allowed to perform the customer identification process and facilitate account activation, with approval and the actual opening of the deposit account to be done only at the head office or branch.

“Clients who want to transact in MBOs would therefore still need to go to a head office or branch to open a deposit account. This practice did not fully capture the potential of MBOs as a banking presence in remote and rural areas where traveling to a bank branch may be prohibitive in terms of cost,” the central bank said.

As of June 2015, there were 531 MBOs present in 337 municipalities. Of the latter, 64 were being served by MBOs alone.

“Increasingly, areas that were unbanked before now enjoy banking presence due to MBOs,” the central bank noted.

In 2014, 11 out of 19 previously unbanked municipalities gained banking services as a result of the establishment of MBOs, while the remaining eight gained regular other banking offices.

The number of banks with MBOs increased to 35 banks in 2014 from just five banks in 2011.

“Because of MBOs, these banks are able to expand outreach at lower costs. Some estimates indicate that monthly operating expenses are seven to eight times lower in MBOs as compared to a bank branch,” the central bank said.

The recent policy issuance, it said, is also expected to further promote savings mobilization through micro-deposits—basic savings accounts especially designed for low income earners that allow maintaining balances of less than P100 and have no dormancy charges.

As of June 2015, there were 2.3 million micro-deposit accounts amounting to P4.6 billion, the central bank said.

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