Non-banks dominate PHL finance

Non-banks dominate PHL finance

SUNDAY, 17 JULY 2011 18:28     JUN VALLECERA / REPORTER  

NONBANK financial institutions dominate the financial landscape in the Philippines, totalling 6,516 in all at end-March this year, far more than banks of all kinds numbering only 746, data from the Bangko Sentral ng Pilipinas (BSP) show.

Nonbanks with quasibanking functions, essentially the investment banking units of parent banks, total only 15 but nonbanks without quasibanking functions are far too numerous at 6,501.

The latter pertains simply to such entities as pawnshops which number 6,381 at present; to 69 nonstock savings and loan associations; and 51 other nonbanks without quasibanking functions registered with the BSP.

Then there are only five offshore-banking units, or OBUs, which act more as listening posts for their overseas banking parents as they are prohibited from engaging in activities that regular-banking units do such as accepting deposits or giving out loans.

Expanded license banks or so-called universal banks, regular commercial banks and the various thrift and rural banks number only 746, which means there is only one bank for every 8.7 NBQBs in existence today.

The numbers help explain in part the urgency of the need for financial inclusion to flourish in the Philippines, which is in essence an advocacy program espoused by BSP Governor Amando M. Tetangco Jr.  Tetangco wants as many Filipinos as possible to have access to the various financial services available.

The bulk of some 90-odd million Filipinos are considered financially illiterate with no appreciation of the impact of keeping one’s savings in mattresses and piggy banks when such funds are better off kept in banks to fund more productive long-term programs that benefit the country overall.

Monetary Board member Alfredo Antonio, one of seven who help decide the direction of domestic-interest rates at BSP deliberations every six weeks, dreams of achieving a more inclusive financial system “by utilizing multiple channels to deliver a wide range of financial services to the unbanked and underserved population.”

“We recognize the potential of the micro, small and medium enterprises to boost economic growth and create employment opportunities especially if we improve their access to credit,” Antonio said at the launching of the BSP awards and appreciation ceremonies in Cebu City on Friday. The awards and appreciation ceremonies aim to recognize the role played by various stakeholders in making financial inclusion a reality.

One such program includes the establishment so-called credit-surety funds (CSF) in various Philippine provinces, some 16 in all at last count, making possible for people to obtain bank loans even in the absence of collateral or leverage.  Such collateral often reaches up to 10 times what they put up as security.

Ordinarily, a borrower gets to borrow up to 70 percent or 80 percent of the value of security or collateral he brings before a bank.

But with the credit-surety fund, a security worth P1 million could help the borrower raise up to P10 million from participating banks under the CSF program, the BSP said.

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