The Monetary Board ordered Rural Bank of San Marcelino in Zambales to stop doing business and be placed under liquidation, the second bank to receive such an order so far this year.
In January, the MB sent out a similar order to Rural Bank of San Agustin in Isabela province.
Both banks, each with only one branch, have been placed under receivership of Philippine Deposit Insurance Corp.
The highest policy making body of the Bangko Sentral ng Pilipinas ordered shut nine banks in 2022, 13 in 2021, and five in 2020 at the height of the COVID-19 pandemic.
Before the contagion, there were 11 banks ordered shut in in 2019; 12 in 2018; six in 2017, and 22 in 2016.
In August 2022, the MB approved in August 2022 its Resolution No. 1145 which approves the increase of minimum capital requirements for rural banks.
The threshold for rural banks was raised to P50 million from P10 million, and the affected entities were given five years to comply.
The requirements set the minimum capital for rural banks with a head office only as well as those with up to 5 branches at P50 million (from P10 million); those with six to 10 branches at P120 million (P15 million); and those with more than 10 branches at P200 million (P20 million).
This move is part of initiatives under the Rural Bank Strengthening Program, intended to enhance operations, capacity and competitiveness of these banks.
According to the BSP, “a strong capital base enables rural banks to enhance their risk management systems, upgrade resources and manage operational costs, meet prudential standards, and accelerate digital transformation.”