Monetary Board Approves New Measure to Expand Access To Finance

The Monetary Board recently approved amendments to banking to allow the establishment of micro banking offices (MBOs).  This approval presents an enormous opportunity for banks to deliver microfinance oriented banking services to areas that are hard to reach and remain underserved. At present, around 37% or 610 out of 1,635 of the country’s cities and municipalities do not have a single banking office leaving its population wanting for much-needed financial services. Establishing full-blown bank branches in these areas may not be economically justified.  MBOs, on the other hand, allow an established bank to extend the reach of its services in a cost-effective manner to overcome such barriers.  “We anticipate that strong rural banks and thrift banks that have been focusing on microfinance will lead the way in taking advantage of this new opportunity to deliver a wide array of financial services to underserved and unbanked areas,” BSP Deputy Governor Nestor Espenilla, Jr. said.
Other banking offices or OBOs in general refer to a permanent office or place of business of a bank with less requirements to set up as compared to a head office, branch or extension office.  The newly approved regulations now recognize two classifications of such OBOs. A regular OBO is one that undertakes purely non transactional banking related activities such as marketing, customer care services, acceptance of loan applications, among others. The other classification is a Microfinance OBO (MF-OBO) or Micro-banking Office (MBO) which provides a wide range of transactional activities which reflect the particular needs of the unserved and underserved market particularly  microfinance clients, overseas Filipinos and their beneficiaries.  This MBO is authorized to provide services that are appropriately designed for the target market such as to accept micro-deposits, disburse  micro-loans and collect payments, sell, market and service microinsurance products, receive and pay out authorized remittance transactions, act as cash in/out points for electronic money, receive utility payments, collect premiums and pay out benefits from social security institutions and other benefit systems including government conditional cash transfer programs, and purchase a limited level of foreign currency.   The MBO shall only perform the activities for which it has specifically applied for and had been authorized to perform.

The Monetary Board recently approved amendments to banking to allow the establishment of micro banking offices (MBOs).  This approval presents an enormous opportunity for banks to deliver microfinance oriented banking services to areas that are hard to reach and remain underserved. At present, around 37% or 610 out of 1,635 of the country’s cities and municipalities do not have a single banking office leaving its population wanting for much-needed financial services. Establishing full-blown bank branches in these areas may not be economically justified.  MBOs, on the other hand, allow an established bank to extend the reach of its services in a cost-effective manner to overcome such barriers.  “We anticipate that strong rural banks and thrift banks that have been focusing on microfinance will lead the way in taking advantage of this new opportunity to deliver a wide array of financial services to underserved and unbanked areas,” BSP Deputy Governor Nestor Espenilla, Jr. said.

Other banking offices or OBOs in general refer to a permanent office or place of business of a bank with less requirements to set up as compared to a head office, branch or extension office.  The newly approved regulations now recognize two classifications of such OBOs. A regular OBO is one that undertakes purely non transactional banking related activities such as marketing, customer care services, acceptance of loan applications, among others. The other classification is a Microfinance OBO (MF-OBO) or Micro-banking Office (MBO) which provides a wide range of transactional activities which reflect the particular needs of the unserved and underserved market particularly  microfinance clients, overseas Filipinos and their beneficiaries.  This MBO is authorized to provide services that are appropriately designed for the target market such as to accept micro-deposits, disburse  micro-loans and collect payments, sell, market and service microinsurance products, receive and pay out authorized remittance transactions, act as cash in/out points for electronic money, receive utility payments, collect premiums and pay out benefits from social security institutions and other benefit systems including government conditional cash transfer programs, and purchase a limited level of foreign currency.   The MBO shall only perform the activities for which it has specifically applied for and had been authorized to perform.

Read the complete article from the Bangko Sentral ng Pilipinas website

View BSP Circular 694: Amendment of Regulations on the Establishment of Other Banking Offices and Notes to Microfinance