BSP allows rural, thrift banks to establish microbanking offices

Rural and thrift banks may establish microbanking offices (MBOs) in cities and municipalities where microfinance-oriented banking services are unavailable, the Bangko Sentral ng Pilipinas (BSP) said Friday. The Monetary Board had allowed the establishment of MBOs to help banks extend the reach of their services in areas where it is economically unjustifiable to set up large-scale bank services, BSP Deputy Gov. Nestor Espenilla Jr. said. “We anticipate that strong rural and thrift banks that have been focusing on microfinance will lead the way in taking advantage of this new opportunity to deliver a wide array of financial services to underserved areas," he said. Around 37 percent or 610 out of the 1,635 cities and municipalities in the country do not have a single banking office, Espenilla noted. “This [development] presents an enormous opportunity for banks to deliver microfinance-oriented banking services to areas that are hard to reach and remain underserved," he said. The banks would now be able to crack the usual barriers to accessing financial services for the underserved market, Espenilla pointed out. “People who have been deprived of a banking presence in their areas need not travel far to be able to save, pay their loans, or make simple financial transactions," he said. Under BSP Circular 694 series of 2010, MBOs accept microdeposits, disburse microloans, collect payments, sell and market microinsurance products, receive and pay out authorized remittance transactions, act as cash in/out points for electronic money, receive utility payments, collect premiums, and pay out benefits, and purchase a limited level of foreign currency. The BSP pointed out that MBOs should only perform the activities for which it has been authorized to perform. Likewise, Espenilla said the Monetary Board also agreed to broaden the scope and definition of microfinance to include microdeposits — a simplified account that is appropriately designed and priced to fit the needs and capacity of the underserved market. “The features include a minimum balance requirement not exceeding P100, non-applicability of dormancy charges, and an average daily savings account balance not exceeding P15,000," he said. “This is another significant enhancement to current regulations which previously only rather narrowly defined microfinance as loans. This recognizes the importance and significant need for accessible and safe savings instruments especially for this market," Espenilla added. The bank official said MBOs must ensure that 50 percent of the total transactions generated should be from the microdeposits and microloans of microfinance clients and they must also have a manual of operations and must be managed by a responsible officer with experience or training in microfinance activities. - JE/OMG, GMANews.TV