KEY agencies of the government recently approved a consultation draft for a National Strategy for Financial Inclusion (NFSI), which seeks to provide a framework that would enable both the public and private sectors to take an organized and efficient approach in bringing financial services to the low-income and marginalized sectors.
Joining the Bangko Sentral ng Pilipinas (BSP) in this endeavor are key state agencies such as the National Economic Development Authority, Philippine Deposit Insurance Corporation, Commission on Filipinos Overseas, Securities and Exchange Commission, and the Department of Trade and Industry.
This initiative is a welcome development for the rural banks since they are primarily created to empower the countryside and have long been at the forefront in the fight against poverty. It is through the rural banks that the “unbanked and underbanked” have gained access to financial services.
To help address the concern of limited financial services, the BSP has set in motion a series of developments in the regulatory environment that enables rural banks to better perform their roles as economic catalysts. The issuance of regulations supportive of inclusive growth helps to reinforce the rural banking industry in its commitment to serve the low-income sector in the countryside through the provision of a wide array of microfinance products and services.
One such directive is the liberalization of micro-banking offices’ (MBOs) allowable activities to include the provision and servicing of other types of loans to microfinance clients such as educational, health, and emergency loans, among others. Subject to BSP approval, banks may also be allowed to increase their limit for the monthly average daily balance of micro-deposit accounts.
To date, there are 508 operating MBOs serving 325 municipalities, of which 62 municipalities are served by MBOs alone. Increasingly, areas that were unbanked have gained banking presence due to MBOs. These simple offices may engage in limited transactional banking activities such as the provision of micro-loans and micro-deposits, among others.
Besides, technological innovations have also made an impact on clients’ demands and thus, on the way banks conduct their business. To keep up with the increasingly fast-paced technological environment, banks now find themselves investing in mobile banking and other electronic banking services.
As for rural banks, the shift to electronic banking is under way. Central bank data showed that the number of ATMs of rural banks jumped to 463 as of September 2014 from 288 a year earlier. The data also showed that of the 106 banks with electronic banking facilities approved by the BSP, 46 were rural and cooperative banks.
Technology as a tool for financial inclusion still offers great potential because it allows banks to reach even the farthest areas at a lower cost. The use of such innovations has also proven to be feasible as more Filipinos show signs of willingness to adopt electronic banking. According to BSP data, the number of e-money transactions rose to 217 million in 2013 from 138 million in 2010.
With one strategy for financial inclusion, rural banks expect a stronger push from all sectors of society. “Financial inclusion” would no longer be just a catchphrase, but something that can be heard and felt, especially by those who need it the most.