The Bangko Sentral ng Pilipinas is preparing to issue two sets of guidelines allowing thrift banks to engage in the cross-selling of financial products, a move that is seen to aid efforts at making average Filipinos financially savvy.
Only universal and commercial banks are currently allowed to cross-sell (or the selling of financial instruments produced by other entities). Should the two sets of guidelines be formally approved by the Monetary Board of the BSP, even thrift banks will be able to engage in the business activity.
Given that thrift banks cater to the middle-income consumer market, their engagement in cross-selling is expected to facilitate the penetration of several financial products to a significant portion of the population.
The first set of guidelines will enumerate the requirements that thrift banks must comply with as they engage in the cross-selling of “simple products” such as traditional insurance policies and credit instruments. Such requirements will include sufficient disclosure of the features of the financial products being offered to clients and the evaluation of the suitability of a product being offered to the specific needs of a client.
The second set of guidelines will state what thrift banks should observe in cross-selling “complex products,” which include investment instruments, investment-linked insurance policies and other securities.
The draft of the first set of guidelines has already been completed and is being circulated among industry members for comments, BSP Deputy Governor Nestor Espenilla Jr. told reporters on Friday at the sidelines of the general membership meeting of the Chamber of Thrift Banks (CTB).
The second set of guidelines is still being completed, he added.
“Some thrift banks are getting bigger and so they want to engage in more activities. Cross-selling will be one opportunity for them to do that,” the central bank official said.
In his speech during the event, Espenilla said the thrift banking industry has an important role in the country’s economic growth. Their progress was seen to translate into increased financial activities of consumers and small and medium enterprises, he said.
Documents from the BSP showed that the combined outstanding loans extended by thrift banks amounted to P402.54 billion as of the end of March, up 13.7 percent from P354 billion a year ago.
The ability of thrift banks to lend more is credited not only to growing deposits from the public, but also to their rising profits. Data showed that thrift banks in the country generated a combined net income of P2.2 billion in the first quarter, up 18 percent from P1.86 billion in the same period last year.—Michelle V. Remo