Bangko Sentral ng Pilipinas Governor Nestor Espenilla Jr. on Monday asked rural banks to take advantage of digital technologies to widen their reach and become vital vehicles for greater financial inclusion.
Espenilla said rural banks proved their invaluable contribution to countryside development through financing or rural communities.
“Given RBAP’s [Rural Bankers Association of the Philippines] 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,” Espenilla said during the 65th annual convention of RBAP in Davao City.
“With the digital transformation of the banking system, we, at the BSP, are optimistic that the rural banking industry can emerge as a strong and dependable delivery channel in the provision of banking services. It can do so by taking advantage of available technology,” Espenilla said.
He said with RBAP’s extensive network of 2,745 banking offices nationwide, the industry was 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.
He said one in every three banking offices in Davao Region and Mindanao was a rural bank.
Espenilla said rural banks should seize the opportunities for further growth because 554 cities and municipalities, or almost a third of the total in the country, were still unbanked as of December 2017.
The 2017 Global Findex by the World Bank showed that only 34.5 percent of Filipino adults had formal bank accounts, ranging from bank deposits to e-money accounts.
Espenilla said that as part of continuing reforms, the Bangko Sentral approved the adoption of minimum prudential liquidity requirements for stand-alone thrift banks, rural banks, cooperative banks, and quasi-banks.
These requirements were designed to enhance covered institutions’ resilience to liquidity stress events and were a significant step in aligning BSP’s supervisory framework with international standards.
He said together with the Philippine Deposit Insurance Corp. and the Land Bank of the Philippines, the Bangko Sentral re-launched the Consolidation Program for Rural Banks.
He said this would further strengthen the industry through stronger financial condition, enhanced management and governance, more synergies and economies of scale, and wider market reach.
“The continuing prudential reforms have given us the confidence to further liberalize our rules to allow more business with operational flexibility. Towards this end, we allowed banks to utilize cash agents as cost-efficient service delivery channels,” he said.