BSP takes on various initiatives to promote financial inclusion
IN EARLY 2020, the COVID-19 global crisis ravaged the country, forcing massive lockdowns and necessitating unprecedented response measures. Against this backdrop, the Bangko Sentral ng Pilipinas (BSP) continued to deliver on its commitment to financial inclusion.
On 23 June 2022, the Office of the President issued Memorandum Circular No. 97 that institutionalized the
Financial Inclusion
Initiative, which is the whole-of-government support for the implementation of the National Strategy for Financial Inclusion (NSFI) 2022-2028 and the adoption of financial inclusion as a development agenda at both the national and subnational levels. The NSFI was launched in January 2022 to support the Filipino people’s aspiration for a “matatag, maginhawa, at panatag na buhay” as espoused in both the government’s Philippine Development Plan and the AmBisyon Natin 2040. The Circular directs all government agencies to support the successful implementation of the NSFI by incorporating relevant priority initiatives in the agency work programs, policies, and budgets. It also encourages the regional development councils and the local development councils to adopt financial inclusion objectives, targets, and programs, in line with the NSFI, in their respective plans. Local government units (LGUs) are also encouraged to promote financial inclusion in their jurisdictions, particularly through, among others, their capacity development programs and provincial development and physical framework plan.
Prior to this, BSP has been leveraging on technological innovations as a key strategy with the intent of bringing BSP closer to the Filipinos despite the pandemic. Among the many initiatives was the 2020-2023 BSP Strategy, which underscored the commitment of the BSP to contribute to the goal of a better quality of life for all Filipinos.
The BSP aims to establish an inclusive financial system by year 2023, with at least 70 percent of adult Filipinos having a transaction account. An inclusive financial system is one where every Filipino has effective and convenient access to a wide range of financial services appropriately designed and relevant to the individual’s needs and capacity. Toward this goal, the BSP launched numerous initiatives on financial inclusion that include:
The Basic Deposit Account (BDA) policy enhancement work was done in 2021. This led to the issuance on 12 January 2022 of Memorandum No. 2022-003, which provides additional guidance and further clarifications on the implementation of the BDA Framework (Circular No. 992 issued in 2018).
Unlike other bank accounts, a BDA, which is designed to promote financial inclusion, is easier to open and maintain. Among other features, it does not require a maintaining balance, does not have dormancy charges, and may be opened for as low as ₱100.
As a result of BSP’s initiatives, 8.0 million people were onboarded to the formal financial system for the first time with their own bank accounts as of 25 May 2022. This was a significant increase from the 7.6 million people who had BDA accounts as of Q3 2021 that had an aggregate deposit amount of ₱4.8 billion placed in 137 banks. This was also a radical increase from the 6.2 million depositors with ₱4.5 billion deposits in 130 banks as of Q3 2020.
A related initiative was the BSP’s support to the co-location strategy of the Philippine Statistics Authority (PSA) and the Land Bank of the Philippines (Landbank) in the rollout of the national ID program. Under the strategy, Landbank co-locates in the registration areas for the Philippine Identification System (PhilSys) so that the registrants may open bank accounts.
The BSP also promoted the digital distribution mode for the various cash assistance programs of the government. Under this approach, cash assistance was disbursed directly to the accounts of the beneficiaries.
Following these developments and in line with the PhilSys co-location strategy with LBP, on 26 January 2022, the DILG issued an advisory enjoining LGUs to, among others, implement digital disbursement for the local and national cash assistance programs.
The BSP continues to provide strong support for the development of digital finance infrastructure crucial for financial inclusion. The BSP is actively involved in the implementation of the PhilSys, as partner of PSA, in the production of the PhilSys ID cards. The BSP is supporting the creation of necessary policies, guidelines, and standards to promote PhilSys use cases, particularly toward its broad adoption in the financial sector to promote inclusion.