BSP expands activities of micro-banking offices

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) has expanded the scope of allowable activities in micro-banking offices (MBO) to further boost government efforts in promoting financial inclusion.

 Under the new measure, micro-banking offices would now be allowed to complete the process of account opening from application up to the acceptance of initial deposit provided the necessary controls are in place.

 “The micro-banking offices policy is one of the initiatives of the BSP to extend the physical reach of financial services,” the central bank said.

As of June 2015, there are 531 micro-banking offices present in 337 municipalities.

“Increasingly, areas that were unbanked before now enjoy banking presence due to micro-banking offices,” the BSP said.

The BSP said 11 out of 19 previously unbanked municipalities gained banking presence as a result of the establishment of micro-banking offices, while the remaining eight municipalities became banked because of regular other banking offices in 2014.

 According to the central bank, banks have also taken advantage of the opportunities as the number of banks with micro-banking offices increased to 35 banks in 2014 from just five in 2011.

Because of micro-banking offices, banks are able to expand their reach at lower costs as monthly operating expense of a micro-banking office is seven to eight times lower compared to a bank branch.

MBOs are scaled-down offices providing a specified range of banking activities and services such as acceptance of micro-deposits, disbursement of micro-loans, selling of microinsurance, purchase of foreign currency, bills payments, government pay-outs, and e-money conversion.

Prior to the recently approved measure, micro-banking offices could perform the customer identification process and facilitate account activation but the approval and actual opening of the deposit account can be done only at the head office or branch.

Clients who want to transact in micro-banking offices would therefore still need to go to a head office or branch to open a deposit account.