In line with its thrust of promoting financial inclusion in the country, the central bank is offering incentives to banks that will establish branches in unbanked areas.
It is also expanding the allowable activities for banks’ micro-banking offices (MBOs).
In a statement on Wednesday, the Bangko Sentral ng Pilipinas (BSP) said that its policy-making body, the Monetary Board, has approved the waiving of processing fees for the establishment of branches in unbanked areas.
The new regulation waives the processing fees for banking offices that will be established in unbanked municipalities to lower the cost of the bank in setting up offices in such areas.
“To facilitate the flow of information, the BSP will post on its website the list of unbanked municipalities, to be updated quarterly,” it added.
The BSP said that this initiative is meant to address the challenge of limited financial services in the countryside.
To date, the central bank noted that there are more than 10,000 banking offices nationwide yet 36.5 percent of the 1,634 cities and municipalities are unbanked.
“Banking presence tends to be skewed to higher-income and more populated areas considering the cost of setting up banking offices and operating such offices,” it stated.
Besides the revised rule on branch processing fees, the Board also widens the scope of allowable activities and services that MBOs can provide.
MBOs are scaled-down offices that enable banks to establish their presence at relatively lower costs.
In addition to the disbursement and release of proceeds of all types of microfinance loans, MBOs can now provide and service other types of loans to microfinance clients such as educational loan, health loan and emergency loan, among others.
The central bank said interested banks may also apply for BSP approval to increase the limit for the monthly average daily balance of micro-deposit accounts from the maximum P40,000, but subject to certain requirements.
“The expanded services will still primarily cater to the needs of the microfinance clients and the prudential requirements and operational controls will be retained,” it said.
The BSP pointed out that the amendments recognize the growing importance of MBOs in the delivery of financial services, especially in underserved areas.
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,” it said.
“These simple offices may engage in limited transactional banking activities such as the provision of micro-loans and micro-deposits, among others,” it added.
Ensuring supportive policies
The central bank said its efforts toward financial inclusion have received international recognition, as shown by the consistent high rankings received by the Philippines in the annual study conducted by the Economist Intelligence Unit (EIU).
For six consecutive years (2009-2014), the Philippines has been cited as one of the top countries in the world in terms of having a conducive environment for microfinance and financial inclusion.
In 2014, the country ranked third in the world and first in Asia. The BSP said, however, much work remains to be done to let Filipinos enjoy greater access to financial services.