MANILA, Philippines—A bill still pending in Congress will make it easier for cooperatives to set up their own banks and help foster economic development in rural areas, the central bank said on Wednesday (Oct. 20).
The Bangko Sentral ng Pilipinas (BSP) said it supports the immediate passage of the proposed Cooperative Banking Act, which aims to streamline the regulatory requirements for these financial institutions.
“The BSP is supporting the Cooperative Banking bill in line with our commitment to further promote a vibrant cooperative banking sector and foster the growth of rural economies,” BSP Governor Benjamin Diokno said in a statement.
Filed in May 2021, House Bill No. 9541 harmonizes regulations on cooperative banks being carried out by the BSP and the Cooperative Development Authority (CDA).
The bill defines cooperative banks as those organized for the primary purpose of providing a wide range of financial services to cooperatives and their members and the public.
The bill provides that cooperative banks shall be under BSP supervision, but that the CDA shall still monitor their compliance with cooperative laws and regulations. For rules on governance, the provisions of banking laws, rules and regulations shall prevail.
The bill grants incentives and privileges to encourage the formation and organization of cooperative banks and provides rules on the registration, regulation and operation of these financial institutions.
The proposed law also expands the definition of membership in cooperative banks, which is currently limited to cooperative organizations and associations.
“The legislative reform is expected to further promote the safety and soundness of the country’s cooperative banking industry,” Diokno said.
The BSP chief said his agency looks forward to continued coordination with Congress, the CDA, and the cooperative banking industry for the passage of the bill.