DOF eyeing rural banking reforms

THE Department of Finance (DOF) is pushing a trio of initiatives to enable the rural banking system to meet the challenge of reducing the number of unbanked Filipinos in the country, given that this sector is at the frontline of the Duterte administration’s efforts to attain financial inclusion.

Finance Secretary Carlos Dominguez III said the reality that a majority of Filipinos remain unbanked to this day even when the economy is growing at a fast pace is “not a good indicator,” as this means they have neither access to financial services nor ways to participate in investments.

He said the DOF, with the help of the Bangko Sentral ng Pilipinas (BSP) and state-owned banks, are finding ways to relax requirements for deposits, introduce new financial products and increase the use of new technologies for electronic payments systems to help rural bankers in their “urgent” mission of reducing the number of unbanked Filipinos, especially in the countryside.

“Technological changes will revolutionize the way we do banking. I urge you to embrace the changes that are forthcoming. This revolution in the financial sector will power our economic growth and help us be competitive into the future,” Dominguez told members of the Rural Bankers Association of the Philippines (RBAP) during the organization’s 65th national convention held at the SMX Convention Center in Davao City on May 21 to 22, 2018.

Dominguez said the DOF is pushing the congressional approval of the Secured Transactions Reform Bill, also known as the Financial Inclusion Bill, that would increase the use of technology in rural lending, and enable farmers and country- entrepreneurs to tap their warehouse receipts, farm equipment and other forms of property as collateral to access credit.

The DOF is also pushing the development of a fully automated credit information system, which is almost fully established and undergoing final tests.

This system will equip financial institutions with a modern centralized credit registry under the Credit Information Corporation to facilitate lending activities, Dominguez said.

The BSP has also reactivated its Consolidation Program for Rural Banks to encourage mergers and consolidation of rural banks and further strengthen the country’s banking industry.

“It will make possible the most efficient use of the common infrastructure, systems, and resources of the smaller banks,” Dominguez said.

He said rural bankers can tap the financial advisory, business process improvement, and capacity-building support services offered by the BSP and assistance from the LandBank on availing themselves of these services to allow them to take part in the Consolidation Program.

Dominguez also cited the administrative reforms being introduced by the BSP that cover liquidity requirements, greater flexibility in the use of thirdparty cash agents and easier acceptance of small depositors to help strengthen the country’s rural and thrift banks.

“I encourage our rural bankers to study these policy amendments that will help us achieve our common goal of financial inclusion,” Dominguez said.

Dominguez also urged rural bankers to familiarize themselves with the recent advances in FinTech (financial technology) while the government rushes the completion of the digital backbone for processing payments in real time, which, he said, will alter the work of financial institutions dramatically over the near term. DOF