BSP wants rural banks to consolidate
THE Philippine central bank wants the rural banking industry to consolidate to make it more resilient, according to its governor.
“What we’re trying to do is consolidate the industry and make it more solid, partly with more capital and by allowing… consolidation,” Bangko Sentral ng Pilipinas Governor Eli M. Remolona, Jr. told a forum on Wednesday.
“This is a troubled industry,” he said. “They don’t really lend to agriculture anymore. They are more into consumer lending. They are not serving the purpose which they were established for.”
In September 2022, the central bank raised the minimum capital requirement for rural banks to P50 million. It covers small lenders with a head office and as many as five branches regardless of location.
Rural banks with six to 10 branches must have a minimum capital of P120 million, while those with more than 10 branches must have a capital of at least P200 million.
The industry has raised concern about the capital hike requirement. Rural banks have until 2027 to meet requirements.
Mr. Remolona said the BSP is studying ways to merge these banks. “We’re trying, we’re looking, we’re analyzing.”
Last month, the Asian Development Bank approved $655,000 worth of grants to nine rural lenders and a rural bank consortium to support their digitalization and capacity-building. — Beatriz Marie D. Cruz
