BSP drafts digital banking guidelines
THE Bangko Sentral ng Pilipinas (BSP) is looking to require digital banks that want to operate in the Philippines to set aside at least P400 million for capitalization.
A draft of the guidelines obtained by reporters said that the central bank is including “digital banks” as a distinct classification of banks in line with its aim to promote an enabling regulatory environment that allows responsible innovation to flourish, promotes cyber resilience and contributes to advancing the digitalization of the financial industry.
“Digital platforms play a pivotal role in promoting efficient delivery of financial products and services and in reaching the unserved and underserved market,” it stressed.
It defined digital bank as a financial institution largely offers financial products and services through digital platform or electronic channels with minimal reliance on physical touchpoints.
A digital bank, however, shall not be allowed to establish a branch or branch-lite unit except for a unit and or office dedicated to receiving and addressing customer concerns.
The BSP also classified a digital bank as either basic or advance.
It said a basic digital bank may perform any or all of the following services with retail customers and/ or micro-, small- and mediumscale enterprises (MSMEs): accept savings deposits, including basic deposit accounts; accept time deposits; accept foreign currency deposits; grant unsecured loans; collect and pay for the account of others; provide remittance and
bills payment services; and issue electronic money products.
Meanwhile, an advance digital bank may perform any or all of the following services with retail customers, MSMEs and large enterprises or other corporate clients: Allowable activities for basic digital banks, grant secured loans, issue credit cards and other activities as may be allowed by the Monetary Board.
Digital banks may also offer financial products and services through cash agents and other delivery partners, the Bangko Sentral added.
A digital bank shall be incorporated in the Philippines, with a minimum capital requirement of P400 million for basic and P900 million for advance.
“The Bangko Sentral may subject a digital bank to higher minimum capital requirement and capital ratio based on its assessment of the risk profile and market reach of the digital bank,” the central bank added.
It added that as digital banks are also exposed to the same types of risks as the other classification of banks, these shall be subject to the same corporate governance and risk management standards, with due regard to the application of the principle of proportionality.