THE BILL which provides a regulatory framework for virtual banks is targeted to be passed this year, according to the senior legislator who filed the legislation.

When asked when they target to have the proposal enacted, Representative Jose Maria Clemente S. Salceda, who filed the bill, said via text: “We will try this year.”

As of Jan. 21, the bill is pending with the House Committee on Trade and Industry, according to the House of Representatives’ website.

Mr. Salceda has said the bill will set a “a clear, coherent, and far-sighted regulatory framework for virtual banks, while also granting adequate latitude to the BSP (Bangko Sentral ng Pilipinas).”

The bill provides that the BSP can grant up to five virtual bank licenses every year for five years. The cap can either be brought down or increased thereafter, depending on the decision of the Monetary Board (MB).

“So that’s sufficient number for competition and [to] allow regulation to catchup with technology[’s] mostly unanticipated uses in financial services,” he said in a text message on Wednesday.

Apart from this, the bill directs virtual banks to refrain from imposing minimum account balance requirements in a bid to boost financial inclusion.

It also mandated the functions of a digital-only bank to disburse loans, whether secured or unsecured; invest in marketable bonds and other debt securities; and issue domestic letters of credit, among others.

A Congressional Oversight Committee on Virtual Banks will be set up to monitor the implementation of the bill. It will include members of the House Committee on Banks and Financial Intermediaries and of the Senate Committee on Banks, Financial Institutions and Currencies.

Current players in the local virtual banking field are CIMB Bank Philippines and ING Bank NV-Manila, which both started their digital bank operations in 2019.

Singapore-based digital bank Tonik Financial, through its local unit Tonik Digital Bank, Inc., is also set to join the race as they have already secured a license from the BSP to operate in the country.

“Last December 2019, the MB approved the license of Tonic Bank. They will announce the date of launching,” BSP Deputy Governor Chuchi G. Fonacier said in a text message.

Rizal Commercial Banking Corp. is also eyeing to go into an online-only bank, RCBC Executive Vice-President and Chief Innovation and Inclusion Officer Angelito “Lito” M. Villanueva said in November. He said they are looking to target the mass market for the offering.

Mr. Villanueva has noted that the country has yet to see local players go into the digital-only banking landscape. — Luz Wendy T. Noble