Lifting of bank branching limits to help farmers, microentrepreneurs

MANILA, Philippines - Major players in the rural banking industry said yesterday the decision of the Bangko Sentral ng Pilipinas (BSP) to lift the restriction on the establishment of bank branches would help government’s efforts to provide much needed financial services in the provinces.

Ian Pama, president of the Rural Bankers Association of the Philippines (RBAP), said BSP Circular 759 issued by the BSP last March 30 could spur branch expansions to provide financial services in far flung areas.

 “For rural banks, it is a way of further creating growth and progress in far flung areas by providing much needed financial services like loans for farmers and micro entrepreneurs,” he stressed.

Pama, who is also president of Valiant Bank in Iloilo, pointed out that the increase in the number of branches as well as expansion of its ATM network and mobile banking would help expand its market presence.

For one, Pama pointed out that Valiant Bank has completed its consolidation with two other rural banks to further expand its market presence in Western Visayas.

 “Other rural banks are doing the same all over the Philippines under the auspices and guidance of the BSP. So, we welcome this very positive decision by the Monetary Board,” he added.

Late last month, the BSP gave banks operating in the Philippines the greenlight to establish as many branches all over the country as long as their capital could support as part of the government’s efforts to serve the unbanked sector.

BSP Amando Tetangco Jr. issued Circular 759 last May 30 lifting the limit on the branches that banks could establish nationwide by amending the branching policy and guidelines under the Manual of Regulations for Banks (MORB).

Tetangco said the limit set on the number of branches allowed to be applied by a bank for establishment at any time was removed.

Latest data from the BSP showed that the banking system’s physical landscape continued to increase as the overall physical network expanded by 181banking offices to 9,050 last year from 8,869 in 2010. The number consisted of 726 head offices and 8,324 branches from 758 head offices and 8,111 branches in 2010.

Under the revised guidelines, banks would no longer be allowed staggered payment for the total branch processing fee for all branches and extension offices that would be charged against the demand deposits of banks.

Likewise, branch processing fee paid would be forfeited in the bank fails to open an approved branch within three years from the date of approval.

The BSP adopted a two-phased liberalization program through Circular 728 in June last year, initially opening a window for banks to apply for and open branches in restricted areas that included the cities of Makati, Mandaluyong, Manila, Paranaque, Pasay, Pasig, Quezon, and San Juan.