Foreign equity in RBs backed

MANILA, Philippines - The Rural Bankers Association of the Philippines (RBAP) and the Bangko Sentral ng Pilipinas (BSP) see the entry of foreign investors in rural banks boosting the economy.

RBAP president Eric Pama told The STAR the entry of foreign equity in rural banks through House Bill 5360 that seeks to amend Section 4 of Republic Act 7353 or the Rural Banks Act of 1992 that was passed in third and final reading would make available additional funds in the rural areas.

“RBAP welcomes the approval of the third and final reading of the house bill allowing up to 40 percent in foreign equity in rural banks. It is definitely a big boost to the rural banking industry,” Pama said.

He pointed out that there would be additional funds that would be available to the clientele of rural banks’ including farmers, fisherfolks, small and micro enterprise, the under banked, under served, and unserved markets.

He added that the passage of the bill is a definitive step towards creating a stronger rural economy that in turn would ensure national progress.

“In general it will boost the economy of our country through countryside development where the additional capital will be infused. This will also allow a transfer of technology and human resource know how, hastening the modernization of all rural banks nationwide,” Pama said.

The House of Representatives passed on third and final reading early this year HB 5360 of Camiguin Rep. Pedro Romualdo allowing the entry of foreign equity into the rural banking system to revitalize the rural banking industry and improve access to banking services for the rural areas of the country.

Under Section 4 of RA 7353, the capital stock of rural banks in the country shall be fully owned and held directly and indirectly only by citizens of the Philippines.