Efforts to persuade Filipinos to take the money hidden under their beds and put the cash into savings accounts enabled the country to gain top marks in a global study on financial inclusion undertaken by think tank Economist Intelligence Unit (EIU).
Describing the efforts to be a sure sign of the nation’s economic maturity, the EIU said that the Philippines topped all of its Asian neighbors and ranked third worldwide in providing financial access to people.
This comes as Filipino regulators continue to craft policies to remove barriers that discourage people, especially the poor, from trusting banks with their cash.
Since 1997, microfinance in the Philippines “has enjoyed considerable support, and the government’s focus on this sector has been a key tool in reducing poverty,” EIU said in its annual report on financial inclusion.
Of the 55 countries mentioned in the report, the Philippines was one of three that “excelled” in implementing financial inclusion policies.
The Philippines scored 79 overall, just behind Peru (87) and Colombia (85). A far fourth was Chile, which scored 66.
The Philippines’ showing reflects the efforts of the Bangko Sentral ng Pilipinas (BSP), which has advocated microfinance and financial inclusion to reduce the incidence of poverty in the country.
As of June 2013, there were 186 banks with microfinance operations in the country, serving over one million clients. The banks had an outstanding portfolio of P8.04 billion. Total savings of microfinance clients stood at P8.9 billion during the period, central bank data showed.
Philippine banks, EIU said, have removed barriers to bank access such as high balance requirements for new accounts, and charges for dormant ones.
Key measures have also been implemented by the central bank to make it easier for borrowers to secure loans. These include a reduction in the amount of cash banks need to set aside as buffer for microfinance loans, and the opening of a rediscounting facility that provides liquidity for thrift and rural banks that have microfinance operations.
Despite the gains, much still needs to be done to get more people to avail of banks’ services.
Data from the World Bank showed that only one in five people, or 26.6 percent of the country’s adult population, have bank accounts.
Another main challenge is the country’s geography which, at times, makes putting up branches in remote locations a losing proposition for banks.
Official data showed that 69.3 percent of savings could be attributed to 20 percent of families. The bottom 50 percent of Filipino families could only generate 6.2 percent of total saving.
Earlier this year, BSP Governor Amando M. Tetangco Jr. said 37 percent of the country’s 1,634 cities and municipalities did not have even one banking office.
However, some gains have been made in recent months.
In June 2014, Tetangco said, 47 million deposit accounts were held by 38.4 million account holders.
This is a considerable increase from the 40.1 million accounts held by 31.1 million depositors recorded as late as March 2012.
EIU expressed its confidence over the BSP’s commitment to its advocacy.
An Inclusive Finance Steering committee was recently established in the country to craft a national strategy for financial inclusion, EIU noted.
“This is only one of three internal committees that the governor chairs, which is indicative of the importance that the governor accords to financial inclusion,” the report showed.