Mid-term financial sector dev't plan to focus on credit and savings policy

Mid-term financial sector dev't plan to focus on credit and savings policy

By LEE C. CHIPONGIAN

April 2, 2011, 12:08am

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) has finalized review of the proposed draft of the five-year financial sector development in the 2011-2016 Medium-Term Philippine Development Plan, which focused more on the "evolving needs" of the financial system after 2016.

Based on the draft document, which is a chapter on the financial development in the MPDP, the aim is to further deepen the financial system through a "balanced development of the domestic banking system and capital market."

The BSP said the focus is on creating a "conducive policy and regulatory environment" as well as to progressively adopt international standards and best practices, good governance and transparency for the effective delivery of financial services.

The key reform objectives in the MPDP financial sector plan includes defining a clear credit policy and credit delivery strategy, the promotion of savings generation at a regional level but institutionalize deployment of resources at national level and to develop an enabling environment for long-term savings.

Other major reforms included in the five-year financial sector development plans are strengthening the governance framework of the financial system in line with international standards and best practices, as well as establish a strong legal framework for financial sector development.

In a statement released in January, BSP said 2010 was a banner year for financial inclusion or a system providing access to financial services. Last year, because of several new measures to enhance financial inclusion, services were extended to the traditionally unserved or underserved market.

"The BSP recognizes that financial inclusion is a worthy policy objective and is something that can be pursued alongside the promotion of stability and efficiency in the financial system," said the BSP. At the end of 2010, about 37 percent of local municipalities are still unbanked and lack financial services.

The new BSP issuances have focused on a wide range of areas including expanding products and services that can be offered by banks to service the varying needs of the market, widening access points where financial services can be delivered, developing the market infrastructure to increase transparency and competition in the industry, promoting innovation to encourage growth in scale and increases in efficiency, and addressing existing barriers that hinder the access to finance by the unserved and underserved market.

"All in all, the issuances build the framework for an inclusive financial system that can service the needs of all markets in an effective, efficient and sustainable manner," said the BSP.

One of the more important issuances was providing new products such as housing microfinance, micro-agri loans, microinsurance and micro-deposits. Last year there were 200 banks that were active in microfinance and they have served 883,863 clients and provided total loans amounting to P6.4 billion and generating savings of P3 billion.

The BSP also expanded banks' network by allowing the establishment of micro-banking offices or MBOs. "Through these MBOs, the usual barriers of cost and distance can be addressed and people who have been deprived of a face-to-face banking presence in their areas need not travel far to be able to save, pay their loans or make simple financial transactions," said the BSP.

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