New law seen to strengthen rural banks

The bill allowing foreigners to invest in rural banks in the country was recently enacted into law.

The Rural Bankers Association of the Philippines (RBAP) on Wednesday hailed the signing by President Aquino of the measure that would allow foreign equity in rural banks, saying this would boost the rural banking sector.

With the law, rural banks stand a good chance of getting more resources needed for expansion and for making their financial services more accessible to people in the countryside, the group said.

“The passage of the Foreign Equity Bill, or Republic Act 10574, into law is a major win not only for rural banks but to the countryside as well. Rural banks are now in a better financial position to reach out and serve both the unbanked and under-banked sectors through improved banking services,” RBAP president Edward Leandro Garcia said in the statement.

Under the new law, which amended the Rural Banks Act of 1992, foreign investors may now own up to 60 percent of voting stocks in rural banks.

RBAP had been pushing for this measure in the belief that access to foreign capital would help strengthen industry members, encourage them to offer more products and services and allow them to expand and reach out to more customers.

The Bangko Sentral ng Pilipinas earlier said foreign equity could indeed help develop the country’s rural banking sector.

The law is expected to reduce cases of rural bank closures.—Michelle V. Remo