BSP eases restrictions on bank branching

The Bangko Sentral ng Pilipinas has cut banks’ branch application processing fee, allowing the institutions to expand their networks, particularly in lower-class municipalities, and serve more individuals and businesses outside high-income areas.

According to the regulator, although the country’s banking system has grown significantly over the years, quite a number of poor areas still do not have access to financial services.

As a result, the BSP issued Circular No. 728-2011, effectively reducing the fee charged by the regulator on a universal/commercial bank or its subsidiary thrift bank to put up a branch in a third- to sixth-class municipality.

The fee is now only P100,000, just half the P200,00 the BSP charges large banks that seeks to put up a branch in a first- to second-class municipality or in any city in Metro Manila and Cebu.

Also, a stand-alone thrift bank now only has to pay P50,000 to put up a branch in a lower-class municipality. The amount is just half the P100,000 a thrift bank has to pay to branch out in a high-income area.

By reducing the processing fee, the BSP hopes to further liberalize bank branching.

According to the regulator, the restrictions on bank branching are being relaxed because the country’s growing economy requires more financial services.

But the BSP stressed that growth of the economy should be broad-based, meaning it must be felt even in poorer areas. That is why the regulator is encouraging banks not just to open more branches, but to expand even in lower-income areas.

Earlier, the BSP issued a directive allowing rural banks to put up branches anywhere in Metro Manila as long as the branches to be established provide microfinance services.

The directive will take effect next month.