BSP assures RBs level playing field

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has assured major players in the rural banking industry of a level playing field as well-capitalized and stronger universal and commercial banks have expanded in the countryside.

BSP deputy governor Nestor Espenilla Jr. said rural banks are the most logical, effective, and essential partners in the BSP’s new and worthy goal of achieving financial inclusion and of bringing access to financial services to the country’s unbanked.

Espenilla said the rural banking industry accounts for around 30 percent of the overall physical footprint of the banking industry with over 2,500 branches mostly found in the countryside where the big banks are not found.

“Trust that the BSP stands ready to provide you the necessary space to expand the scale and scope of your business activities. We have shown you and we will continue to show you in concrete ways our trust and confidence in the full potential of our rural banks,” he stressed.

He pointed out that some members of the Rural Bankers Association of the Philippines (RBAP) have expressed their apprehension that the bigger players are entering their space, one in which they have long been comfortable in.

“The good news is – you were here first. You have first mover advantage. You know your markets intimately and your markets know you. Capitalize on this advantage while also finding ways to further improve your services,” he added.

The BSP official said to be able to stay in the game, rural banks should seize new opportunities, create partnerships and useful linkages, and innovate in the products and services that they provide and deliver to their clients.

He added that rural banks should also enter into strategic partnerships with government agencies like Department of Agriculture to create viable agricultural financial ecosystems.

Results of the Consumer Finance Survey conducted by the BSP in 2009 showed that eight out of 10 Filipinos do not have a savings account and less than 21 percent of households said they take out loans from formal sources.

Data also showed that 40 percent of our country’s deposit accounts and 60 percent of the total amount are in the National Capital Region (NCR) alone while 37 percent of the country’s municipalities have no banking office at all.

 “The challenge and the task are gargantuan but one that is replete with many opportunities. Clearly, there is enormous potential in this evidently untapped market. Many are already seeing the potential in this space – international investors, technology companies and yes, even the big banks,” Espenilla said.

The BSP has also issued Circular No. 730 on loan transparency and disclosure to enhance the implementation of the Truth in Lending Act wherein rural banks expressed their concern that such rules may create an uneven playing field since they co-exist with other types of credit providers that may not be subject to similar rules.

This prompted the BSP to issue Circular Nos. 754 and 755 to cover non-bank financial institutions and non-supervised credit granting entities that include even in-house credit providers like real estate companies and auto dealers.

He added that the BSP has also coordinated with the Securities and Exchange Commission, Insurance Commission and the Cooperative Development Authority to issue parallel regulations.