MANILA – The Bangko Sentral ng Pilipinas (BSP) has been processing 18 transactions for bank mergers, consolidations, and acquisitions since 2020 and half of these involve rural banks, BSP Governor Benjamin Diokno said.
In a virtual briefing on Thursday, Diokno expressed optimism about the improvement of the rural banking sector, especially after the central bank’s policy-making Monetary Board (MB) approved on March 3, 2022 the Rural Bank Strengthening Program (RBSP).
“We believe that the RBSP is necessary to boost the resilience of rural banks amid the evolving challenges in the banking system and to enhance their role in promoting inclusive growth,” he said.
The RBSP has four key elements namely strengthened capital base, holistic menu of five time-bound tracks, incentives and capacity-building interventions, and review and enhancement of existing regulations.
Diokno said the working group tasked on the RBSP started working on the program since June 2021.
“It will ensure that the program is responsive to our goal to enhance the operations, capacity, and competitiveness of rural banks,” he said.
Diokno said a review on the minimum capital requirements for rural banks is on the final stages, adding that a proposed circular on this will be sent to stakeholders for comments in the coming weeks.
“Based on studies, a strong capital base is critical in addressing the key challenges of rural banks. It will enable rural banks to enhance their risk management systems; upgrade resources and manage operational costs; meet prudential standards, and accelerate digital transformation,” he added. (PNA)
