Access to banking products and services in the rural areas continues to expand as deposits in rural banks rise. This proves that given their geographical reach, rural banks are seen as important access points by low-income individuals.
Data from the Philippine Deposit Insurance Corp. showed that deposits in the rural banking industry grew by 6.4 percent to P1.5 billion by end-March 2015 from P1.4 billion in the same quarter last year.
The number of deposit accounts also expanded by 8 percent to almost 6 million total accounts from 5.5 million in 2014.
Also, alongside the growth in the industry’s deposits, rural banks have expanded their offerings of loan products. As a result, community banks felt a slight increase by almost a billion in their collective total loan portfolio to P128.8 billion by end-March 2015 compared to P127.9 billion in the same quarter of 2014.
Despite the rise in the industry’s assets, however, statistics still showed that sectors need to be tapped to promote wider banking transactions.
Based on the Bangko Sentral ng Pilipinas (BSP) National Baseline Survey on Financial Inclusion, only 43 percent of Filipino adults currently save money. In addition, 7 out 10 of those who save money opt to keep their savings at home.
The BSP’s baseline survey also showed that in terms of urban-rural gap, the percentage of adults with savings in banks is higher in urban; and the percentage of adults with savings in cooperatives or at home is higher in rural areas.
Adults who save money under the mattress make up 60 percent in the National Capital Region (NCR or Metro Manila), 69 percent in Luzon, 67 percent in Visayas and 74 percent in Mindanao.
Further, the percentage of adults with savings in banks also decreases among those with lower income. Most of adults in class E (extremely lower class) or 79 percent keep their savings at home.
As an industry committed to serving marginalized sectors with different products, mobilization efforts were utilized to promote wider deposit base and national financial inclusion.
The promotion of micro-deposits effectively encourages low-income individuals to save. Micro-deposits are savings accounts that cater to needs of basic sectors, low-income clients, and are specifically designed for unserved or underserved sectors.
Micro-deposit accounts are for individual microfinance clients whose average daily savings account balance does not exceed P15,000. These accounts also do not require a maintaining balance and are exempt from dormancy charges; thus, they effectively remove the barrier to access a deposit account.
Also, loan products, such as Micro, Small and Medium Enterprise (MSME) loans and Agriculture and Agrarian Reform (Agri-Agra) credit, are being offered by rural banks to extend finances to particular sectors that need support in funding.
Guided by a BSP circular, MSME loans are offered to any business activity within the major sectors of the economy, such as industry, trade, services, etc., whose total assets must not be more than P3 million for Micro; ranges from P3 million to P15 million for Small; and more than P15 million to P1 billion for Medium enterprise.
Agri-Agra loans beneficiaries, on the other hand, are farmers, fisherfolk, agricultural lessees, farm workers, tenant farmers, and the like. The loans shall be granted for the purpose of agricultural production, promotion of agribusiness and exports and construction of facilities in support of agriculture and fisheries, among others.
Mobile banking is also offered to cater to needs of individuals who do not have physical access to banks. It encourages clients to open deposit accounts, save and, later, avail of other banking products and services.
With client-friendly services such as Text-A-Payment, Text-A-Deposit and Text-a-Sweldo (Salary), rural banks have served over 170,000 clients and have facilitated more than P9 billion in mobile banking transactions.