The Monetary Board, the policy-making body of the Bangko Sentral ng Pilipinas (BSP), has partially lifted the general moratorium on the licensing of new thrift and rural banks to allow the entry of microfinance-oriented banks on a very selective basis. Markets not yet fully served by existing rural banks will be given preference.
An applicant microfinance-oriented bank, which shall either be a thrift bank or a rural bank, should meet a number of conditions, as contained in the implementing Circular No. 273 dated 27 February 2001. Among others, capital should be owned by private persons, multilateral entities or a combination thereof. For microfinance-oriented rural bank, the minimum capital shall be P5 million or the applicable existing requirement for a new rural bank, whichever is higher; while thrift banks shall comply with the applicable existing capital requirement.
Organizers must have the capacity to engage in microfinancing. Among the indicators of this principle are: (1) at least 20% of paid-in capital of the bank must be owned by persons with track record in microfinancing; (2) majority of the board members have experience in microfinancing with at least one member having actual banking experience; and (3) the proposed bank must have, as a minimum, an adequate loan tracking system that allows daily monitoring of loan releases, collection and arrearages, and any restructuring and refinancing.
In addition, the organizers must submit a clear vision and mission statement of their commitment to reach low-income clients, including a written manual of operations inclusive of the administrative and credit program systems and procedures.
Once operational, the microfinance-oriented bank is required to maintain at all times microfinance loans as defined under existing BSP regulations equivalent to at least fifty percent (50%) of the bank’s gross loan portfolio.
Subject to the standard requirements for the establishment of branches, microfinance-oriented banks, are also exempted from the general moratorium on the establishment of bank branches, while existing microfinance organizations applying for authority to establish or convert into a rural or thrift bank may also be allowed to convert their existing branches/offices into branches of the bank proposed to be established by applying authority for the purpose.
The establishment of microfinance-oriented banks, which will cater primarily to the needs of microentrepreneurs can contribute rightfully to a alleviation of the plight of the poor who are normally not considered bankable.