Financial inclusion indicators rise, but slower than peers — BSP

by Janine Marie D. Soliman, Businessworld, Dec 24, 2016

FILIPINOS HAVE increased their use of basic financial services offered by banks after individuals gained more access to banking establishments in the past five years, according to the central bank.

In a statement e-mailed to reporters on Friday, the Bangko Sentral ng Pilipinas’ (BSP) latest report on the state of financial inclusion revealed that, “financial access has expanded in terms of number and reach of banks and other financial institutions” between 2011 and 2015.

Financial inclusion refers to effective access to a wide range of financial services. Part of the BSP’s mandate is to ensure that financial products are readily available.

The report also stated that an “improvement in usage of financial services” was evident “as seen in the growth of deposits, loans, microfinance, and electronic money.”

The central bank reported growth in the number of micro-banking offices (MBOs) to 617 at the end of June, up 93% from the same period in 2012. Local government units with MBOs totaled 393 at end-June, up 105%.

MBOs are scaled-down units of banks that target low-income clients in areas that are harder to reach, making them major contributors in achieving financial inclusion.

Year-on-year, the number of MBOs rose by 18% at the end of June, faster than growth seen in full-service banking offices and automated teller machines at 4% and 13% respectively.

The BSP said that 75 municipalities are currently served by MBOs, which are most common in CALABARZON (Region IV-A), MIMAROPA (Region IV-B), Bicol (Region V) and Western Visayas (Region VI).

Meanwhile in terms of increased usage of basic savings accounts, the central bank reported that “remarkable growth” was seen in micro-deposits, which were up 217% at 2.9 million accounts at the end of June from the 925,389 accounts in June 2012. Year-on-year, growth was 34%, which was faster than growth in other deposit products at 6%.

Micro-desposit accounts are designed for low-income users, with a maintaining balance not exceeding P100 along with an average daily balance of not more than P40,000. The account has no dormancy charges.

Money deposited in these accounts amounted to P6.3 billion in June, up 181% from the the same period in 2012.

However, the BSP noted that despite an improvement in financial inclusion indicators, “changes appear to be gradual and slower in comparison with our peers,” citing data from the World Bank that showed Filipino adults with a formal account rose by 4.7 percentage points to 31.3% in 2014. The equivalent growth rate in lower middle-income countries was 14 percentage points.

“Recognizing that much work needs to be done, BSP remains committed in nurturing a conducive environment to financial inclusion,” the central bank stated.

“At the national level, BSP is leading the implementation of the National Strategy for Financial Inclusion (NSFI) together with 14 other government agencies. In June 2016, Executive Order No. 208 was signed to institutionalize the Financial Inclusion Steering Committee (FISC), the governing body that provides strategic direction and overall guidance in the NSFI implementation,” it added.

The NSFI aimed to heighten the country’s level of financial inclusion through improved collaboration between stakeholders of the public and private sectors. —