BSP issues circular on basic deposit account
The Bangko Sentral ng Pilipinas (BSP) has issued the circular framework for the basic deposit account and provisions for how banks can customize this type of product.
Based on the memo of BSP Circular No. 992, signed by BSP Governor Nestor A. Espenilla Jr. on February 1, banks are granted the “liberty to customize their product offerings” according to their niche market or “based on the needs of the identified market”
By BSP definition, a basic deposit account is an interest- or non-interestbearing account designed to promote financial inclusion. “This account will enable Filipinos, especially the unserved and underserved, to receive and make payments, as well as have a facility for store of value. It will have the basic functionalities that will characterize ease, accessibility, convenience, and reasonable cost for both banks and customers,” said Espenilla in the circular memo.
To be allowed to customize basic deposit account products or implement the “liberalized customer onboarding” procedure, the BSP said banks should have simplified Know-Your-Customer (KYC) for “low risk customers, wherein identifying the customer and verifying their true identity may be based on any document or information reduced in writing which the covered person deems sufficient to establish customer’s identity… or other reliable, independent source documents, data, or information.”
“In offering the basic deposit account, banks shall adopt clearly-defined written policies, procedures and controls to ensure due diligence and compliance with applicable rules and regulations,” according to the circular.
In a statement earlier, the central bank said the minimum key features of the basic deposit account include an opening amount of less than R100; no minimum maintaining balance; and no dormancy charges.
“To prevent misuse of the basic deposit account, its maximum balance is set at R50,000,” said the BSP. “These features meet the need of the unbanked for a low-cost, no-frills deposit account which they can open even if they do not have the standard identification documents.”
As an incentive for banks, the basic deposit account is granted a preferential zero percent reserve requirement which lowers their account maintenance cost. This regulatory incentive does not apply to regular bank accounts even if their balances fall below R50,000, said the BSP.
“Ownership of an account provides Filipinos the tool to save and transact money in a safe, convenient and affordable manner. It can unlock access to a wider range of financial services to meet their various needs, including credit, insurance and investments,” noted the BSP. It cited data from the World Bank Global Findex (2014) which said that only 31.3 percent of Filipino adults have formal accounts. The usual barriers include costs, lack of money, lack of documentary requirements, and perceived low utility of a bank account, among others.
As of end-June, 2017, the banking industry has 44 million total depositors in current, time and savings accounts. The total accounts have an outstanding balance of R11 trillion.