BSP still fixing kinks in new regulation on basic bank accounts

The central bank’s plan to craft rules on basic bank account have a few more essential technicalities to comb through such as possible regulatory relief to banks that will offer it and may take awhile to implement, according to the Bangko Sentral ng Pilipinas (BSP) chief.

“We’re still ironing out some kinks. There are some regulatory relief issues that have to be sorted out,” BSP Governor Nestor A. Espenilla Jr. said.

These issues include reserve ratios and the insurance on regular bank deposits. Regulatory relief, however, may ease some burden to banks that will open basic bank accounts. The BSP will also have to work out deposit insurance guidelines with the Philippine Deposit Insurance Corp. (PDIC) to accommodate any changes. PDIC – which has a maximum R500,000 insurance per depositor – charge banks with insurance premium of 1/5 of one percent per year.

“We have to think our way through them (such as) balancing the cost benefit," Espenilla said. "It’s not a high margin business."

Espenilla announced earlier that they intend to release circulars for the creation of simple, hassle-free basic bank accounts that will have no maintaining balance, and possibly reduced fees and charges. This may also lead to preventing banks from closing an account when it reaches zero balance.

“Part of the design of the basic bank account is there’s no maintaining balance. That (will) require engagement of the private sector industry… whether that makes sense,” he added.

Banks take out fees for bank accounts that are below maintaining balance. Most banks – not all – shut down depositors’ accounts when funds fall in the negative despite years of charging fees on said accounts for not maintaining the required amount.

There are volumes of complaints to banks, some lodged with the central bank’s Consumer Affairs Group, since banks do not take the time to inform depositors that their accounts have been closed. Based on BSP’s rules, banks are only required to contact depositors if they have dormant accounts that are about to be removed, however deleting zero-balanced accounts are upon the discretion of the bank.