Philippines: Microbanking Growing Faster than Most Banking Offices - BSP

Dec 2016
The Philippines, December, 24 2016 - “When it comes to usage of basic savings accounts, there has been a remarkable growth in micro-deposits which are specifically designed to the low-income sector,” according to the BSP.

The Bangko Sentral ng Pilipinas (BSP) is now monitoring 617 microbanking offices (MBOs) as of end-June this year, up 93 percent from 2012’s 320.

The BSP said MBOs are growing faster than other types of banking offices in the last four years or 18 percent average rate per year compared to other offices’ four percent growth rate. Automated teller machines or ATMs are increasing at a rate of 13 percent.

The BSP noted that 393 local government units now have MBOs which were up 105 percent from 2012’s 192. There are 75 municipalities that are solely being served by MBOs.

“When it comes to usage of basic savings accounts, there has been a remarkable growth in micro-deposits which are specifically designed to the low-income sector,” according to the BSP. A micro-deposit account has a maintaining balance not more than P100 with average daily balance not exceeding P40,000. This deposit account does not have dormancy charges.

The BSP also reported that micro-deposit accounts have increased by 217 percent to 2.9 million accounts as of end-June this year from 925,389 accounts in the same period in 2012.

Micro-deposits increased by 181 percent to R6.3 billion from P2.2 billion four years ago which meant these micro-deposit accounts are growing at an average yearly rate of 34 percent, faster than the six percent growth of other deposit products.

In a report, the BSP said financial access has expanded in terms of number and reach of banks and other financial institutions. There is also improvement in usage of financial services as seen in the growth of deposits, loans, microfinance, and electronic money.

“For access, worth highlighting is the growth in MBOs which are low-cost banking infrastructure that can be established in municipalities where it is not feasible to set up a regular branch,” the report said. Regular branches or the full bank branches are mostly concentrated in the National Capital Region.

“MBOs have been more contributory to financial inclusion by extending the reach of financial services to underserved and unserved areas,” said the BSP.

Majority of MBOs are located in areas outside Metro Manila particularly in the regions of Calabarzon, Bicol, Western Visayas, and MIMAROPA. Most municipalities that were previously unbanked are now enjoying access to banking services because of MBOs, said the BSP.

At the beginning of 2016, the BSP approved new rules that expanded the scope of allowable activities in MBOs to improve access to financial services.

For example this year, MBOs are now able to complete the process of account opening from application up to the acceptance of initial deposit provided that the necessary controls are in place.

MBOs are “scaled-down offices” with a range of banking activities and services that includes acceptance of micro-deposits, disbursement of micro-loans, selling of microinsurance, purchase of foreign currency, bills payments, government pay-outs, and e-money conversion.

Source : Manila Bulletin

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