ADB to tap rural banks for financial inclusion

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Asian Development Bank (ADB)

DAVAO CITY — The Asian Development Bank (ADB) is set to roll out a five-year financial inclusion program that will tap rural banks as the window for loans to the poor.

Kelly Bird, ADB country director for the Philippines, said in an interview with BusinessWorld here last week that the ADB is finalizing the terms of the program targeted for launch this year, but the initial “policy-based loan” component has a fund of about $300 million that would support the government in its financing programs until 2022.

Mr. Bird, who was in the city for the regional press launch of the Philippines’ hosting in May of the 51st Annual Meeting of the ADB Board of Governors, said the program would also cover the expansion of an existing project on helping rural banks improve their systems.

“(The program) will include some policy areas that we will work on and capacity assistance to rural banks,” he explained.

The project aims to help rural banks “migrate their core banking systems to the cloud… What that means is they are more secure, efficient and can get more clients,” he added.

The project was piloted at the Cantilan Bank branch in Surigao del Sur last year, with a $150,000-grant used to procure and set up cloud-based banking technology.

Cantilan Bank has a network of 42 branches, mostly located in the Caraga and northern Mindanao.

Mr. Bird said improving digital systems would allow the rural banks to serve as conduits for expanding financial inclusion, as he noted that only “18% of adults from the bottom 40% of the population have bank accounts.”

“We really want to get those (without bank accounts) to the financial sector so they can save,” he said. — Carmelito Q. Francisco