The Bangko Sentral ng Pilipinas (BSP) has recently reaccredited the Basic Course on Corporate Governance offered by the Rural Bankers Research and Development Foundation Inc.

(RBRDFI), the research and training arm of the Rural Bankers Association of the Philippines (RBAP). This is a key development that will ensure the rural banking industry’s continued adherence to best corporate practices that are crucial in curbing cases of bank failures in the future.

Based on its Memorandum No. M-2012-055, the BSP said that the course offered by RBRDFI, along with that of the Institute of Corporate Directors (ICD), comply with the revised course syllabus prescribed under Memorandum No. M-2012-026 issued on June 4, 2012.

Corporate governance is a system whereby shareholders, creditors and other stakeholders of a corporation ensure that management enhances the value of the corporation as it competes in an increasingly global market place.

On December 13 and 14, 38 participants from 32 rural banks registered for the first corporate governance seminar held by RBRDFI in partnership with the Land Bank of the Philippines, which provided financial assistance for the attendees.

BSP Assistant Governor Dolores Yuvienco earlier said in a speech on corporate governance that there are three main challenges that the rural banking industry must overcome to promote good governance: the challenge to overcome complacency; the challenge to put the public’s welfare in the forefront; and the challenge to transcend beyond familiarity.

The lean organizational structure of rural banks is considered one of its greatest strengths, as familiarity among a small group of people foster camaraderie and trust. However, any change in the personnel will quickly alter this trust system and possibly expose the bank to high risk of abuse. It is important then that the bank’s control environment is not dependent on personalities or circumstances, but rather on the system itself. An effective checks and balances system that will protect the bank’s assets at all times will ensure that the rural bank will survive and thrive no matter who the personnel are.

Adherence to BSP corporate governance regulations and exposure to the required training course lead not only to compliance with regulations but more importantly, hopefully give bank directors knowledge of good governance practices. Adoption of these practices should lead to increased shareholder value, increased public confidence, and a sound banking system.

In turn, the increased shareholder value, public confidence, and a sound banking system will eventually contribute to the country’s economic growth.

The Philippines has improved its standing on a regional watch list compiled by investment house CLSA Asia-Pacific Markets earlier, as the Aquino administration brought in much-needed governance reforms, tackling government corruption and improving transparency and accountability.

Based on the report “CG Watch 2012 Corporate Governance in Asia” dated September 10, the Philippines’ overall score improved by four percentage points to 41 percent this year, modestly improving from its previous position at the bottom of the list. This year’s cellar is now occupied by Indonesia.

The Philippines is still in the bottom half of the CG Watch list, joining the ranks of India (51 percent), South Korea (49 percent), China (45 percent) and Indonesia (37 percent). The higher-ranked markets include Singapore (69 percent), Hong Kong (66 percent), Thailand (58 percent), Japan and Malaysia (both 55 percent) and Taiwan (53 percent).

The CLSA report credited the passing of the Governance Act in June 2011, which created a new body to oversee 157 government-owned or -controlled corporations, for the Philippines’ improved ranking, as well as the enactment of a new bankruptcy law.

Meanwhile, to improve the country’s corporate governance ranking, the ICD suggested the offering of more support to the Securities and Exchange Commission in terms of resources; enforcing the independence and effectiveness of Capital Markets Integrity Corp., the body that monitors and polices market trading activities; revising regulations relating to preemption rights; publishing more detailed data on enforcement and a deeper archive of company releases and documents; speeding up the release of audited accounts behind regional and global standards; improving the disclosure of director’s remuneration; and encouraging the splitting up of chairman or chief executive officer roles.