BSP prods rural banks to expand, lend more

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) yesterday cited the role of rural banks in promoting broader countryside development through financial inclusion and in helping micro, small and medium enterprises (MSMEs), as well as farmers and fishermen.

In his keynote address during the 65th Annual Convention and General Membership Meeting of the Rural Bankers Association of the Philippines (RBAP) in Davao City, BSP Governor Nestor Espenilla Jr. said the industry is strategically positioned to be a catalyst for greater financial inclusion.

“Your close ties and familiarity with the rural communities you serve make you effective providers of rural financing and other corollary microfinance products and services. Almost 97 percent of the industry’s network is spread across provinces,” Espenilla said.

The industry’s assets stood at P250.7 billion, while its network comprised of 2,745 banking offices nationwide.

The BSP chief urged rural banks to further expand in the countryside as 554 cities and municipalities or almost a third of the total are still unbanked, while the 2017 Global Findex of the World Bank showed only 34.5 percent of Filipino adults have formal accounts.

“Given RBAP’s strategic role and familiarity with rural communities, it is crucial for the industry to leverage on innovative technologies and liberalized branching rules that BSP has initiated. This will further expand market reach and enhance existing service delivery channels in the rural areas,” he said.

According to Espenilla, about a third of the loans of rural banks are extended to households through salary loans to the working class, while farmers and fisherfolks are also among the biggest recipients.

Espenilla said the industry recorded a solid return on equity of nine percent and a profit of P3.4 billion last year.

The BSP chief said innovations enabled by digital technology and value chain approach would unlock new opportunities for rural banks to deliver a whole range of financial services catering to farmers and their communities.

“The Agricultural Value Chain Financing Framework provides an opportunity to improve the lives of 10.9 million Filipinos employed in the agriculture industry, as well as MSMEs that are engaged in production and related activities such as processing, distribution and trading,” he said.

Consistent with the government’s thrust under the Medium-Term Philippine Development Plan to spread economic development to the countryside, Espenilla said there are now more opportunities for rural banks to grow and provide the financing needs of their clientele.