No takers for P5B rural bank fund, BSP official says

Almost two months after the Bangko Sentral ng Pilipinas and the Philippine Deposit Insurance Corp. launched the P5-billion Strengthening Program for Rural Banks in late August no countryside lender has come forward to use money from the fund, an official source said Tuesday. Rural banks are afraid of being misconstrued as having financial trouble, a central bank official, who declined to be named, told reporters. It's a kind of stigma countryside-based lenders are afraid to be associated with because approaching regulators for money may have a negative impact on depositors and creditors, the central bank official said. Not a single rural bank has dared dip into the SPRB fund, which the policy-making Monetary Board has approved in August, the source added. The program encourages countryside lenders to borrow from the pool set up by the BSP and PDIC. Another option under the SPRB is for a rural bank to use money from the fund as equity to strengthen its financial position. However, the fund only has a two-year shelf life after which the money shall revert back to the coffers of BSP and PDIC. In December 2009, Bangko Sentral Gov. Amando M. Tetangco Jr. announced the SPRB saying its letter and intent was to encourage mergers and consolidation among rural banks that in the end the Philippines will have a strong countryside banking industry. The central bank official who requested anonymity said that PDIC was forced to do a road show in Mindanao —Cagayan de Oro City — this month to dispel the growing perception that dipping into the SPRB is sign of weakness. — VS, GMANews.TV