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May 27, 2024

Strengthening program for rural banks takes effect

The Bangko Sentral ng Pilipinas (BSP) has started the implementation of initiatives to further strengthen the rural banking sector to boost the resilience of small banks amid the global health crisis.

BSP Governor Benjamin Diokno said that the Rural Bank Strengthening Program (RBSP) that aims to enhance the operations, capacity, and competitiveness of the industry is available for three years.

“The RBSP was developed to enhance the operations, capacity, and competitiveness of rural banks in view of their vital role in promoting countryside development and inclusive economic growth,” Diokno said.

The regulator has issued Memorandum No. 2022 – 024 laying down the guidelines of the RBSP as approved by the BSP Monetary Board through Resolution No. 308 dated March 3.

The RBSP is a structured program including strengthened capital base, holistic menu of five time-bound tracks, incentives and capacity building interventions, and review and enhancements of existing regulations.

Since the imposition of the strictest and longest COVID-19 lockdowns in the world in March 2020, the central bank’s Monetary Board has ordered the closure of 21 rural banks nationwide while two small banks surrendered their banking licenses to the regulator.

“The impact of the pandemic varies from one bank to the other depending on the exposures and business models. This is true for all banks across all jurisdictions,” Diokno added.

Since 2020, the central bank has processed 18 transactions for mergers, consolidations, and acquisitions since 2020.

Of the total number of transactions, half involved rural banks.