BSP eyes ‘ basic’ accounts to attract unbanked

THE BANGKO SENTRAL ng Pilipinas (BSP) will soon allow banks to offer “basic” deposit accounts with simpler requirements and without any maintaining balance, in a bid to encourage more Filipinos to enter the banking system.

BSP Deputy Governor Nestor A. Espenilla, Jr. said the regulator is drafting a circular covering basic bank accounts to be released possibly within the month, which seeks to broaden financial inclusion by making it easier for Filipinos to tap formal lending channels.

“We are still designing that, but the idea is the requirements for KYC ( know-your-customer rule) should be easier, and fees should be lighter or none. That’s the basic because that is the barrier to entry,” Mr. Espenilla told reporters in a recent ambush interview.

“Those are the pain points, they (the unbanked) don’t want to open accounts because there are so many requirements.”

Although refusing to discuss details, the BSP official said the proposal should allow Filipinos

to open bank accounts with “no fees and frills,” and with minimal paperwork in order to accommodate more clients.

The relaxed rules will be limited to bank customers engaged only in “small- value” transactions.

The National Baseline Survey on Financial Inclusion published by the central bank in 2015 showed that only 43% of Filipino adults held savings, with 68% of them opting to keep their money at home rather than placing them in accounts under financial entities. To push financial inclusion further, the BSP previously dangled incentives for banks to put up branches or microfinance offices in unbanked towns and provinces.

Mr. Espenilla earlier said that “any official document” and certificates issued by local government units may be presented to transact with banks and other BSP-supervised firms, in lieu of identification cards (IDs) issued by national government offices which is the current standard.

The KYC rule seeks to establish the full identity of individuals looking to transact with a financial firm, which is usually done by requiring government-issued IDs from a client as part of risk management protocols observed by banks.

The BSP is also eyeing to remove the minimum balance requirement for accounts under the same draft circular.

Mr. Espenilla said among the target markets are beneficiaries of the government’s Pantawid Pamilyang Pilipino Program, where the conditional cash grants can be directly credited to bank accounts and should remain intact without fear of dormancy charges.

Currently, the Department of Social Welfare and Development distributes the funds to some 4.4 million poor families through cash cards from the state-run Land Bank of the Philippines and its authorized agents.

Mr. Espenilla said the proposal is also in line with the creation of InstaPay within the year, which is a clearing house for real-time credit of electronic fund transfers worth P50,000 or less under the National Retail Payments System framework.