The Bangko Sentral ng Pilipinas (BSP) has just launched the National Strategy for Financial Inclusion (NSFI), a government action plan that aims to enhance cooperation between ministries, government agencies and the private sector to improve people’s access to financial services.
The overall vision of the NFSI is to have a financial system that is “accessible and responsive to the needs of the entire population toward broad-based and inclusive growth, particularly to ensure that it serves traditionally unserved and marginalized sectors of the population.” In effect, the low-income segment of society would shy away from informal options that make them even more vulnerable to financial stress, debt and poverty.
Although the Philippines was ranked as first in Asia and among the top three in the world in terms of having a conducive environment for financial inclusion, according to the Economist Intelligence Unit’s (EIU) 2014 maiden survey, access to financial services remains a challenge for the country.
This is evidenced by the recent Nationwide Baseline Survey on Financial Inclusion initiated by the BSP, where it showed that only four out of 10 Filipino adults set aside money to save and 68 percent of them keep their savings at home. There is also a high rate of credit through informal sources such as family, relatives and friends at 62 percent and informal lenders at 10 percent.
This is in stark contrast with those who obtained credit from formal institutions. Only 12 percent borrows from lending companies, almost 11 percent from cooperatives, 9.9 percent from microfinance non-governmental organizations, and only 4.4 percent from banks.
In addition, data as of end-December 2014 showed that 36 percent of municipalities in the country still do not have a banking office.
To improve the population’s access to financial services, the BSP has tapped government agencies and private sectors to discuss action plans for that purpose, which are now embodied in the NFSI.
For its part, the Rural Bankers Association of the Philippines (RBAP) was assigned to strategize on Financial Education and Consumer Protection and Advocacy Programs—two of four key areas mapped by the BSP as necessary points for the promotion of inclusive financial systems. The two other points are Policy Regulation and Data and Measurement.
The central bank said financial education and consumer protection are critical factors to enable the unserved and underserved markets folded into the financially included public. Programs under this key area, the BSP said, should target the marginalized sector and help them acquire knowledge, develop skills to make well-informed economic and financial decisions, and be confident to exercise their rights and responsibilities as financial consumers.
Advocacy programs, meanwhile, should encourage financial and other similar institutions to provide financial products and services, enjoin the public to access formal financial services, create awareness on the rights of consumers, and develop and maximize public-private partnerships toward financial inclusion.
The BSP also laid out several frameworks for each key area that should guide partner agencies and sectors, such as the RBAP, in carrying out the assigned principles.
RBAP, as the fundamental financial products and services provider of communities in the countryside, fully supports the central bank’s advocacy and pledges to engage closely with the BSP and other sectors toward full realization of national financial inclusion.