The new regulation, however, imposed strict risk-based qualifications with heavy bias in favor of strong banks.
BSP officials said they would allow banks to establish branches anywhere in the Philippines only if they meet these qualifications.
However, the BSP still excluded the biggest cities in Metro Manila, namely: Makati, Mandaluyong, Manila, Parañaque, Pasay, Pasig and Quezon cities. The municipality of San Juan was also excluded.
The BSP said studies show that these areas are still adequately served by existing banking offices and opening them to new branches would only create banking congestion and cut-throat competition.
BSP Governor Amando M. Tetangco Jr. said "despite the exclusion of these cities, the lifting of the moratorium in other growth areas around the country still represented significant liberation. "
The BSP has been hoping that its moratorium would compel banks to consolidate in order to expand their branch networks in the major cities. Big banks, specifically, are encouraged to buy into smaller banks that want to get out of the banking business.
Moreover, Tetangco said banks would now be allowed to open branches anywhere in the country, even the closed areas, if the branches they will open would be geared specifically toward microfinance, particularly enterprises registered under the classification of Barangay Micro Business Enterprises (BMBEs).
"These banks or bank branches would only have to meet the minimum capital requirement of P325 million, specifically in the case of thrift banks and rural banks," Tetangco said.
"The pro-microfinance bias of the new regulation reflects the BSP’s desire to encourage the efficient delivery of microfinance to the basic or disadvantaged sectors," he added.
According to Tetangco, the BSP’s study showed that despite the proliferation of alternative touch points like phone-banking, Internet banking and text banking, the establishment of full-service branches was still the most effective way of reaching out to customers.
"Providing greater access to formal banking services would encourage residents to join the economic mainstream and stimulate the local economy," Tetangco said.
However, Tetangco stressed that the relaxation of branching guidelines do not provide a carte blanche to expand at will. He said only financially strong and well-managed banks – microfinance-oriented or not – were allowed to put up additional branches.