By Bianca Cuaresma
Conclusion
AS a significant part of the country was proven to remain lacking access to banks, the government adopted measures to improve financial access in the country.
These measures were designed to address the issue of the ordinary Filipino’s reluctance to go to any of the formal lender and open an account.
The Bangko Sentral ng Pilipinas (BSP) also deliberately crafted a financial-education program for rural and urban Filipinos to address the top 3 reasons cited by the National Baseline Survey for Financial Inclusion (NBSFI) as to why most are reluctant to open a bank account, i.e., the lack of money; lack of need for a bank account; and the limited knowledge in opening an account.
Other regulatory measures were in place to widen the banking reach, including the establishment of so-called microbanking offices (MBOs); the promotion of the use of electronic money as a platform for fund transfers, as well as the easing of the documentary requirement for financial consumers carrying low antimoney-laundering risks.
“Recently, we issued Circular 868 [dated January 26, 2015], which expands the range of services that can be delivered in MBOs and waives the collection of processing fee for banking offices that will be established in unbanked municipalities. As we wait for the industry to react in the light of the recent regulation, the BSP will continue to monitor and identify areas for further enhancement, if any,” the central bank said.
The BSP vowed to continue working on crafting regulations to improve the current statistics on banking penetration in the Philippines, which comes dead last in the region.
The Global Findex Database 2014 of the World Bank, which was published in April this year, also ranked the Philippines last in banking penetration relative to five of the original members of the Asean.
In the Philippines, some 31 percent of all adults own a bank account. This pales in comparison with the 36-percent penetration rate in Indonesia, 78 percent in Thailand, 81 percent in Malaysia and 96 percent in Singapore.
On whether the central bank has a timeline for achieving greater bank penetration, BSP Governor Amando M. Tetangco Jr. said: “There is no specific timeline on how fast the share of unbanked population should decline, but we have a commitment in the Maya Declaration that we will nurture an enabling policy environment that will make it possible for all Filipino adults to have an account in a formal financial institution.”
“While this may sound ambitious, we have a positive outlook that our financial system will continue to become more inclusive,” Tetangco told the BusinessMirror.
The Maya Declaration is the first global and measurable set of commitments on financial inclusion by developing and emerging countries.
The governor further said the outlook on greater financial access by Filipinos drew optimism from “sustained initiatives to increase access to financial services in terms of widening the range of affordable financial products, expanding physical reach through microbanking offices, extending virtual reach through e-money and mobile banking, among others.”
“Our ongoing work on the National Retail Payment System and National Strategy for Financial Inclusion [NSFI] are also potential game changers which can bring financial inclusion in our country to new heights,” Tetangco said.
International Monetary Fund Resident Representative to the Philippines Shanaka Jayanath Peiris corroborated this view, saying that while there is no ideal level of banking penetration, each country has its own constraints and the BSP is doing well in managing these limitations.
“Each country faces different constraints and has a different set of initial conditions. What the experience of other countries has made clear, however, is that the sequencing and pace of financial development is extremely important,” Peiris told the BusinessMirror.
“The key is to increase the provision of banking services, and financial services more generally, at a measured pace—that is, at a pace that does not threaten financial stability,” he added.
Peiris further explained that the capacity of supervisors and regulators in the country has to rise in step with the level of financial depth.
“The BSP has the management of this tradeoff at the forefront of its thinking as it continues to pursue financial-inclusion initiatives,” Peiris said.
International credit watcher Fitch ratings is also positive that the BSP’s efforts should lead to a higher level of bank access in the country.
Fitch Ratings Director for Financial Institutions Elaine Koh told the BusinessMirror that aside from active efforts in pursuing financial inclusion, the Philippines is also bound to get more banking penetration due to the improving conditions of the economy.
“We expect banking penetration to increase over time as rising incomes drive growth in the bankable population. This should help to diversify the credit exposures and funding profiles of the banks, which are currently relatively heavily weighted toward the business segment,” Koh said.
Likewise, the president of the Bankers Association of the Philippines, Lorenzo Tan, holds the same optimistic view on bank penetration going forward.
Tan told the BusinessMirror the banks support 100 percent the BSP’s vision of greater banking access down the line.
Just last month, stakeholders convened at the BSP complex to help craft an overall NSFI.
The final NSFI, according to the BSP chief, is seen as a platform for stakeholder coordination in the pursuit of a more effective process of delivering financial services to Filipinos and prevent the duplication of initiatives in the country.
Tetangco also said this will serve as a “blueprint” for policy regulation, data and advocacies relating to financial inclusion.
The NSFI draft was prepared by an interagency committee comprised of 13 agencies, namely the Commission on Filipinos Overseas, Cooperative Developments Authority, Department of Budget and Management, Department of Education, Department of Finance, Department of Social Welfare and Development, Department of Trade and Industry, Insurance Commission, National Economic and Development Authority, Philippine Deposit Insurance Corp., Philippine Statistics Authority and Securities and Exchange Commission. The formulation of the NSFI was initiated by the BSP.
The central bank announced on Tuesday that the government is set to launch the NSFI on July 1.
The launching will be honored by the presence of the United Nations Secretary- General’s Special Advocate for Inclusive Finance for Development Her Majesty Queen Maxima of the Netherlands.
The program will be held at the Philippine International Convention Center.