Many Filipinos still rely on informal channels for their borrowings, while almost two out of every five households use their ATM cards as collateral for borrowings, such that the Bangko Sentral ng Pilipinas is urging intensified financial inclusion efforts to bring more borrowers into the formal sector.
Results of the BSP’s 2014 Consumer Finance Survey released Friday showed that 86 percent of Filipino households were unbanked three years ago, said Rosabel B. Guerrero, director at the BSP’s department of economic statistics.
“The majority of the households or 86 percent did not have a deposit account. This means only the remaining 14 save money in banks,” Guerrero said in a press briefing.
Guerrero said most of the households that did not have deposit accounts claimed they did not have enough money to keep.
Others said they did not need a bank account; that the closest bank location was still too far away from them; that they could not manage accounts; they found service charges as too high for them to afford; the minimum balance was too high; they did not like to deal with banks, and they did not trust banks in general, Guerrero said.
“Results show that the majority of household heads who are employed in private establishments and government are banked. In contrast, the majority of household heads who are self-employed, worked for private household, other household’s farm and, in other informal occupations, are unbanked,” according to Guerrero.
Monetary Board member Felipe M. Medalla said this was a case in which there was “financial exclusion as an effect of economic exclusion,” as despite having among the fastest-growing economy in the region, there remained a gap across income groups.
The survey also showed that only 2 percent of households in 2014 had credit cards. “A bigger percentage of households (3.9 percent) in the National Capital Region were credit card holders compared to those in areas outside NCR (1.1 percent),” Guerrero said.
“About seven in 10 (71.4 percent) credit card holders paid their monthly bills through banks’ operations. These included over-the-counter transactions (65 percent), mobile banking (3.5 percent), internet banking (2 percent), and ATM bank-to-bank transfers (0.9 percent). Meanwhile, 18.9 percent were paid in Bayad Centers, 3.9 percent through direct cash payments and 1.9 percent through salary deduction,” she added.
Also, the survey showed that the most popular collateral being used by borrowers for their loans was their ATM cards. The persons who lend the money hold the ATM cards of the borrowers until they get fully paid.
“About eight different kinds of household assets were used as collateral on their loans, such as personal, salary, multipurpose, business, educational and emergency loans. The “sangla ATM” was the most used collateral of the borrowers at 39.9 percent. This was followed by land (22.5 percent), appliances (11.7 percent), vehicles (7.7 percent) and harvest (6 percent),” according to Guerrero.
The survey results highlighted the need to sustain the BSP’s financial inclusion and education initiatives, Deputy Governor Diwa C. Guinigundo said. —BEN O. DE VERA