BSP chief seeks to boost financial inclusion

DESPITE the rapid growth of the Philippine economy in recent years, a large number of Filipinos still have no meaningful access to the formal financial system—a situation that makes it more difficult for them to move up the socioeconomic ladder and also leaves them vulnerable to scams.

Thus explained Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr., who said that regulators would renew their drive toward greater “financial inclusion” in the country in his last 11 months in office.

“The need is really great,” he said in an interview with the Inquirer Friday evening. “There is no limit to what can and should be done to improve the situation, but there is a limit to what we can realistically achieve in terms of the time that we have.”

Tetangco—who ends his second and final term as central bank governor in July 2017—said the BSP was focusing on educating more Filipinos to help them become more financially savvy as well as in implementing structural reforms that would make the formal banking system more accessible to more citizens.

“There are many metrics we look at,” he said, explaining the improvements that still need to be done. “The number of bank accounts of Filipinos and the number of ‘un-banked’ Filipinos. We also look at different indicators like banks’ geographic concentration and distribution.”

Regulators estimate that a third of the country’s municipalities do not have access to banking offices. And while 47 percent of Filipinos borrow money regularly, most do so from informal lenders, relatives and friends. Only 4 percent of Filipinos borrow from banks.

Tetangco explained that it was not enough to have a large number of banks and branches, but stressed that regulators have to ensure that these banks’ services were available even to Filipinos who live far from large metropolitan areas.

“That’s why we have modified our regulatory framework to allow for the establishment of micro banking offices,” he said. “These are stripped down, low-operating cost banks manned by two or three people, situated in the countryside so they can be closer to the community.”

The BSP chief explained that the government’s strategy to bring the benefits of economic growth to more Filipinos has three “legs”, namely greater access to financial services, improved financial education and financial consumer protection.

“First, we have to make it easier for Filipinos to access the financial system,” he said. “Then we have to teach them how to use it, then, as people become more financially savvy, they’ll need consumer protection because they’ll start investing.”

At present, the BSP chairs the National Strategy for Financial Inclusion, which is an initiative shared by 14 government agencies.

“The idea is to coordinate all financial inclusion efforts of all agencies and avoid duplication and have a unified thrust,” Tetangco said. “At the same time, this involves working with the private sector, which also has its own initiatives. We work with the private sector and multilateral institutions to push the initiative.”