CTB at 49: On the road to a future of exciting possibilities

MANILA, Philippines — Based on the 2020 report of the International Trade Center, in collaboration with the Department of Trade and Industry (DTI), small- and medium-sized enterprises (SMEs) are the economic lifeblood of the Philippines. They account for more than 99% of registered businesses in the country and provide 60% of jobs.

Increasing the competitiveness of small firms, therefore, is vital to build their resilience against shocks while promoting sustainable and inclusive growth and ultimately, help in nation-building.

It is in this context that thrift banks play an immense role in the country’s financial system and economy, as these banks primarily focus on providing services to individuals and SMEs.

And since its inception in 1974, the integrated Chamber of Thrift Banks (CTB) has proven its effectiveness as a professional association through the policies it has been able to translate into concrete action and programs it has managed to put in place, all for the benefit of its customers and stakeholders. 

In celebration of its 49th anniversary this year, here is a quick look at some of the CTB’s most significant milestones after almost five decades.

2020s: From streamlining loan processes to adopting sustainability measures

In 2022, as a member of the Bangko Sentral ng Pilipinas-Technical Working Group (BSP-TWG) on Small Business Loan Application Form (SBLAF), the CTB helped make possible the BSP Issuance on the SBLAF which is designed to streamline the loan application process for MSMEs.

In the same year, the chamber assisted member banks in their journey towards adopting sustainability principles in their organizations to address pressing environmental needs. This includes providing the banks, through a CTB-World Wildlife Fund Philippines webinar, a road map which served as a guide for the banks in the preparation of their own transition plans as required by the BSP.  

In 2020, the CTB saw the reduction of the minimum liquidity requirement (MLR) for standalone thrift banks from 20% to 16% until December 31, 2021, co-terminus with the other relief measures given to banks by the BSP.

2010s: More collaborations with the BSP

The CTB received the BSP Outstanding Strategic Industry Partner of the Year award (Advocacy Support category) in 2017. CTB bested other financial industry associations with its active participation and engagement with the BSP, as well as its implementation of innovative projects/programs that are relevant to financial stability and inclusivity and consumer empowerment. 

In 2014, the CTB initiated, took the lead and collaborated with the Bankers Association of the Philippines (BAP) and the BSP regarding the BSP Issuance on the Uniform Loan and Mortgage Document or ULAMA, a document that is now used by the industry for home buyers and mortgage lenders which sped up transactions, reduced legal risk and promoted transparency. 

In 2010, the CTB paved the way for the accreditation of its member banks in the BAP-CB’s Online Loandex Information Exchange System. The CTB also oversaw the granting of BSP authority for regular banking units (RBUs) of thrift banks to invest in readily marketable foreign currency-denominated debt instruments. 

In addition, CTB also saw the granting of the BSP authority for thrift banks to engage in foreign exchange (FX) swap and forward transactions to fund purchases of foreign currency-denominated instruments. 

In 2009, CTB helped in making possible the granting of the BSP authority to issue foreign letters of credit or L/Cs for qualified thrift banks and the liberalization of BSP Rediscounting Guidelines, specifically the deletion of the joint and solidary signature (JSS) requirement. 

The previous year, in 2008, the CTB introduced the legislation on Free Patent and helped in the Issuance by the Supreme Court of Administrative Matter No. 99-10-05 as a means of addressing the industry’s concern on the indiscriminate issuance of temporary restraining orders or TROs.

In 2007, CTB helped secure the granting of the BSP authority for thrift banks to engage in derivative activities, as well as the foreign currency deposit unit (FCDU) authority to include investments in long-dated marketable securities. The CTB also helped in the reduction of the minimum capital requirement for thrift banks to operate an FCDU. In the same year, the CTB helped in having the BSP grant authority to all thrift banks to engage in limited trust business.

In 2006, CTB aided small enterprises through an exemption of loans from the required submission of Income Tax Returns/ Audited Financial Statements (ITR/AFS), giving them two years to comply.

A year earlier in 2005, the CTB drafted an internal credit risk rating system for thrift banks. And in 2004, it helped member banks gain access to the BAP’s Negative File Information System.

2003 saw the passage of RA No. 9238, exempting financial institution transactions from value added tax (VAT) and reverting banks to gross receipt tax (GRT). The same year saw the accreditation of qualified thrift banks as collection agents for the Bureau of Internal Revenue (BIR). 

The same year also had thrift banks eligible for rediscounting under the BSP’s rediscounting facility for microfinance and ROPOAs were made part of the compliance to the required 75% loans-to-deposit ratio. 

In 2002, a “front-end system” connected thrift banks to the Philippine Payment System/Real-Time Gross Settlement Unit (PPS/RTGS) at an affordable cost. 

1990s: Adoption of the CTB code of ethics, passage of R.A 7906 etc.

In 1999, the CTB made possible the thrift banks’ subscription to Pag-Ibig bonds as alternative compliance to agri-agra lending.

The year prior, in 1998, the CTB Code of Ethics was adopted and the Compliance System for Thrift Banks was drafted in collaboration with the BSP.

In 1997, BSP Circular 110 was issued granting authority to thrift banks to accept government deposits. In the same year, the CTB and the BSP collaborated on the latter’s three-volume manual on the GL/SL Reporting Scheme for thrift banks. In addition, the sector’s exemption from the payment of the GRT under the Comprehensive Tax Reform Program (CTRP) was retained. 

1995 was a pivotal year for the CTB as it saw the passage of the Thrift Banks Act (R.A. 7906), a vital piece of legislation that promotes the stability and integrity of thrift banks, protects the interests of depositors and facilitates the efficient operations of these financial institutions. 

Future forward

“In the coming years, our member-banks and our clients/customers can anticipate a range of growth opportunities that will shape their prospects and aspirations,” said CTB president Cecilio D. San Pedro in an interview with The Philippine STAR. Among these is the shift to digital banking and fintech collaborations. 

The CTB also reiterated its continued support to SMEs. “Member banks can focus on providing specialized financial services, including lending, advisory and digital tools, to help SMEs grow and succeed,” explained San Pedro. 

CTB is also ramping up its efforts regarding sustainable finance which opens opportunities for member banks to develop green financing options, socially responsible investment products and initiatives that align with environmental and ethical considerations.

“Cross-border banking” is also on the horizon. According to San Pedro, member banks can explore expanding their services across borders, tapping into international markets and catering to the needs of customers with cross-border financial activities, remittances and international business ventures. 

The CTB will also be focusing on ensuring financial inclusion, serving unbanked and underbanked populations through inclusive banking initiatives that can drive growth. “Member banks can design accessible products and services that meet the financial needs of marginalized communities,” San Pedro added.

Other initiatives in the pipeline include regulatory changes, enhancing of data security and privacy and strategic partnerships with other financial institutions, technology providers and non-banking entities that could open new avenues for growth and expand member banks’ service offerings. 

“Our member banks as well as our clients/customers can look forward to a future full of growth opportunities driven by all those enumerated above,” said San Pedro. 

“By embracing these avenues and remaining adaptable to evolving customer needs and market trends, member banks can position themselves for success in an increasingly dynamic and competitive banking landscape.”

Editor's Note: This press release is paid for by Chamber of Thrift Banks.