Micro-banking gets BSP backing

The Bangko Sentral ng Pilipinas has approved the opening of more than 400 micro-banking offices (MBOs) so far this year as it aims to trim the number of Filipinos who still consider banking an alien concept.

MBOs are bank branches that provide “micro” financial services. They offer small amounts of loans to micro-enterprises, accept small deposits, provide remittance services and sell micro-insurance products.

But unlike regular bank branches, MBOs have much smaller operations and are easier to establish because they require smaller capital, fewer staff and smaller space.

About 100 more applications are in the pipeline for approval, according to the central bank.

The BSP believes that MBOs will help bring financial services within the reach of people in remote areas in the country.

The establishment of more MBOs is consistent with the goal of achieving “financial inclusion” in the country, said BSP Deputy Governor Nestor Espenilla Jr.

“We deliberately allowed the establishment of MBOs as a policy innovation, to enable well-run banks to reach out to the unbanked/under-banked people in hard-to-reach areas in the country,” Espenilla told the Inquirer.

In a presentation made during the assembly of members of the Rural Bankers Association of the Philippines on Tuesday, Pia Bernadette Tayag, head of the BSP’s financial inclusion staff, said that from the start of the year to the end of August, the BSP had already approved the opening of 459 MBOs.

She also said the BSP was expecting to approve more MBO applications within the next few months.

Tayag said the promotion of MBOs was one the measures designed to enable more people to gain access to banking services.

For this purpose, the rural banking sector has also started offering electronic banking services, which can be tapped through the use of Internet or mobile phones.

Tayag said 50 rural banks were already offering e-banking services.

Also, she said the BSP had allowed rural banks and MBOs to offer micro-insurance products to serve the insurance needs of people in the rural areas.

The BSP noted that a significant number of municipalities in the country, 609 out of 1,634, remained unserved by banks. Also, about 80 percent of Filipinos do not have bank accounts, according to results of a BSP survey.—Michelle V. Remo