BSP to liberalize rules for micro-banking offices

Posted on May 30, 2017

THE CENTRAL BANK is looking to allow the broadening of services offered by micro-banking offices (MBOs) to bring more Filipinos aboard formal financial channels, as part of its plans to spur increased digital payments in the country.

Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor A. Espenilla, Jr.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor A. Espenilla, Jr. said the central bank is looking to liberalize the functions allowed for micro-banking units.

MBOs are scaled-down bank offices meant to cater to the needs of microfinance depositors and borrowers, as well as overseas Filipino workers and their beneficiaries.

“We will be moving towards more liberalization. That’s also coming up,” Mr. Espenilla told reporters in an ambush interview on Friday. “Before, the MBO is only for micro-lending activities. Now, we are moving in the direction of the concept of a light branch -- functionality that is appropriate to the location, not necessarily limited to microfinance.”

The central bank last amended its rules for micro-banking offices in February 2016 as it allowed the bank units to approve and accept new small-deposit accounts without seeking approvals from their mother bank branches, as part of a wider thrust towards greater financial inclusion.

The MBOs are authorized to deliver “limited” banking activities, such as releasing small-scale loans, serving as bills payment centers, selling microinsurance products, and exchanging foreign currency to a maximum of $300 per microfinance client. All other bigger transactions may be done before the full-size bank offices and branches.

“A commercial bank might want to put up a micro-banking office in a palengke (public market). What they’ll do there is to take deposits from vendors and then give out loans to vendors. They are going to bring banking to where the business is, that is the concept,” the senior central bank official said.

Mr. Espenilla said the move is in line with the central bank’s rollout of the National Retail Payments System (NRPS), which encourages electronic transactions and digital payments to get more Filipinos to use formal financial channels. “Part of the proposition of the NRPS is account to account movement. For that to really happen, everyone should have an account,” he said.

The incoming BSP governor added that a circular allowing the creation of “basic bank accounts” is also underway, which would feature minimal documentary requirements and little or no maintaining balances for small-scale transactions. -- Melissa Luz T. Lopez