Foreign ownership in rural banks backed

A group of rural banks in the country lauded efforts of Congress to draft a law that will allow the sector to accept foreign capital.

The Rural Bankers Association of the Philippines (RBAP) said such a law would pave the way for the entry of more capital into the rural banking system, which should help banks expand their services to depositors and borrowers.

In a hearing on Monday by the House committee on banks and financial intermediaries, legislators had agreed to work on the industry’s proposal to amend the Rural Banking Act in such a way that would allow rural banks to take in foreign partners.

The committee has agreed to have a consolidated bill that incorporates inputs from its members. The bill will seek to allow a maximum of 40 percent foreign ownership in a rural bank.

The existing law does not allow foreign ownership of rural banks given earlier belief that they could better perform their mandate of helping develop the agriculture sector if they are owned and operated by Filipinos.

RBAP spokesperson Tomas Gomez IV told the Inquirer that the rural banking industry was happy about the developments on the proposed amendments to the Rural Banking Act, saying foreign capital was believed to help pursue development of its member-banks.

Industry members believe foreign capital will enable them to afford advanced technologies that can improve their operations.

They also said there was keen interest among foreign investors to engage in rural banking in the Philippines.

The move is also supported by the Bangko Sentral ng Pilipinas.