BSP: ARMM bank loans defeat financial inclusion

The Bangko Sentral ng Pilipinas (BSP) has reported a steady decline in the loan portfolio of banks in the Autonomous Region in Muslim Mindanao (ARMM), stumping the central bank’s financial inclusion program. In a report, the BSP noted a marked downtrend in the loan portfolio ARMM banks within a 10-year stretch, down by 124 percent to P601 million as of end-June 2010 from P1.348 billion in 2001. On the other hand, the Mimaropa area of Mindoro, Marinduque, Romblon, and Palawan posted a 20-percent rise in loans to P5.042 billion from P4.197 billion in the same comparable period. ARMM and Mimaropa belong to 14 of 17 regions that, according to the BSP report, show below-average scores in bank density ratios. Both regions were at the bottom of the BSP report. The findings have raised questions on the effectiveness of the BSP and the national government’s financial inclusion program, which aims to extend financial services to as many Filipinos as possible. In the face of these data, BSP Gov. Amando Tetangco Jr. said monetary authorities continue to provide “a regulatory environment that is responsive and open enough to encourage financial institutions to provide credit to the underserved and unbanked sectors of the society, while ensuring that these financial institutions are cognizant of the risks they are taking." "We have expanded the product lines, encouraged mobile banking, and will soon release updated anti-money laundering rules, realizing that for microfinance institutions the standard AML approach may not be appropriate," Tetangco added. The central bank chief also said the BSP has begun to fortify consumer protection programs, disclosure practices, and financial literacy programs of banks to protect the underserved sectors, which unscrupulous institutions and individuals often exploit. — PE/VS, GMA News