BSP may lift ban on bank branches

The Bangko Sentral ng Pilipinas (BSP) plans to lift the moratorium on new bank branches, even for commercial banks, but only if the new branches are opened specifically for microfinancing purposes.

BSP Governor Rafael Buenaventura said the central bank is considering the possibility of relaxing its bank branching policies to entice banks to go into microfinancing.

The BSP has been pushing for the creation of microfinancing institutions all over the country and is even claiming to set up a foundation to solicit funds from multilateral and bilateral donors to finance the program.

"Our goal is to have at least one microfinancing institution for each province. We plan to set up a specialized microfinance branch in areas where there is economic activity and from which they could expand their businesses by borrowing from microfinance institutions. We might also tie up with local financial institutions," Buenaventura said.

The central bank, aside from overseeing commercial banking operations, also wants to focus on providing financing to small and medium enterprises to spur economic activity, especially in the countryside.

Recently, the BSP approved the establishment of a P100-million Micro Enterprise Bank of the Philippines (MEBP) by the International Finance Corp. (IFC), the investment arm of the World Bank.

The IFC controls 10 percent of the bank together with Planters Development Bank which controls 40 percent. PDB is owned by businessman Ambassador Jesus Tambunting of the nationwide chain of Tambunting Pawnshops.

The other partners are Internationale Micro Investitionen AG, a German microfinance firm that owns 20 percent; Stiching Duurzanne Ontwikkeling En Natturbescherming Postcodeloterij-Doen, a Dutch foundation for sustainable development owns another 20 percent; and Netherlands Development Finance Co., another Dutch firm owns 10 percent.

Earlier this year, the BSP approved the establishment of the Opportunity Microfinance Bank (OMB), the first microfinance bank in the country.

OMB is composed of non-government organizations (NGO) that include the Alliance of Philippine Partners in Enterprise Development, Opportunity International Network, Alalay sa Kaunlaran sa Gitnang Luzon, Kabalikat Para sa Maunlad na Buhay Inc. Taytay sa Kauswagan, Inc., and Daan sa Pagunlad Inc. OMB will grant collateral-free microfinance loans and other associated banking services to their target clients.

The bank’s target borrowers are vendors, small sari-sari stores and other small businesses which produce daily and/or weekly income and which do not require a big capital outlay. – Des Ferriols