Banks are now allowed to serve their clients through the so-called cash agents in the country as the Bangko Sentral ng Pilipinas (BSP) recently decided to relax existing regulations on activities outside banking premises.
In a statement made on Wednesday, the central bank said its policy-making body, the Monetary Board, recently approved the guidelines for new bank service channels enabling lenders to expand service delivery channels through cash agents in the country.
These so-called cash agents are usually those smaller-scaled institutions involved in quicker and more innovative money transfer solutions and other activities.
“These cash agents are typically cash rich third-party entities with many outlets that conduct regular business in fixed locations anywhere in the country, such as convenience stores, pharmacies and other highly accessible retail outlets,” the central bank said.
The BSP said these cash agents enable banks to leverage on innovative digital solutions to serve a wider client base, particularly in the low-income and rural areas, where there is limited commercial incentive to establish a full branch or even a microbanking office (MBO).
The new regulations allow banks, with prior BSP authorization, to serve clients through cash agents contracted by banks to accept and disburse cash in their behalf, facilitating online self-service deposits, withdrawals and fund transfers, as well as bills payment.
Cash agents can also perform Know-Your-Customer procedures, as well as collect and forward application documents for loan and account opening. They may also sell and service insurance as may be authorized by the Insurance Commission.
“Through this new cost-efficient service channel, serving the currently unbanked and low-income segments can become more viable and sustainable for banks,” the BSP said.
Data from the central bank show that more than 36 percent of all the municipalities in the country have no banking presence, although most of these are served by a variety of nonbank financial institutions, like pawnshops, cooperatives and lending investors.
In addition, the Monetary Board also relaxed regulations on offsite deposit servicing, thus, removing highly prescriptive operational requirements and conditions before banks may engage and offer these services.
“The amended regulations provide banks with more flexibility in designing appropriate and cost-efficient ways to render deposit pick-up and delivery services and, as a result, enhance client experience,” the BSP said.
With the relaxed rules, the BSP is also keen on ensuring the safety and soundness of banks and customer protection by emphasizing banks’ responsibility for ensuring the adequacy of risk management and internal control systems for the liberalized servicing activities.
“The BSP will evaluate the quality and sufficiency of these risk management and control systems before granting authorization to perform banking services outside bank premises,”
the BSP said.