Bangko Sentral backs digitalization of microfinancing firms

ABS-CBN News

Posted at Dec 03 2021 11:35 AM | Updated as of Dec 03 2021 11:55 AM

MANILA— The Bangko Sentral ng Pilipinas said Friday it was committed to helping microfinance institutions (MFIs) digitalize in order to expand services in the countryside
 
Microfinancing plays a huge role in financial inclusion especially in remote areas being the "last-mile" financial institutions, the BSP said in a statement. 
 
This type of financial institution helps reduce the dependence on informal lending.

“We continue to engage the donor and development communities to encourage the provision of technical and financial assistance for the digitalization initiatives of MFIs,” BSP Governor Benjamin Diokno said in a forum with a network of microfinance firms.

“We are thus working to further ensure MFIs are equally placed alongside big industry players and well-positioned to advance financial inclusion beyond the pandemic,” he said.

As of the first quarter of 2021, there were about 149 microfinance banks catering to 2.05 million borrowers, the central bank said.

Diokno urged MFIs to participate in the central bank's digital transformation roadmap

The goal is to convert 50 percent of payments to digital and encourage 70 percent of the population to open bank accounts by 2023. 

Part of the roadmap is the rollout of the Philippine National ID (PhilSys) which will ease bank account openings through online and real-time Know-Your-Customer (KYC) activities and reduced costs, the BSP said. 

Microfinancing firms can also tap digital banks as partners, the central bank said.

So far, the BSP has granted 6 digital bank licenses to operate in the country. 

This new banking framework has no physical branches and is designed to make opening bank accounts more accessible especially for the unbanked.

Gokongwei's GoTyme, Union Bank's UnoBank, PayMaya's Maya Bank, Land Bank's OF Bank, as well as Tonik Bank and UnoBank backed by foreign investors have secured digital banking licenses from the BSP.

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