BANGKO Sentral ng Pilipinas (BSP) seems to be expanding its scope and has made appointments to roles that I was not previously aware that it addressed in detail.
One such is BSP’s Policy and Specialized Supervision Sub-Sector. BSP says that this sector will introduce, by the end of March, guidelines on risk-based pricing standards which aim to enhance the existing credit risk management framework.
Guidelines.
I wonder if BSP believes that banks take much notice of its ‘guidelines’ or even ‘instructions’.
Many years ago BSP issued instructions that banks should, by June 2012, substitute their current ATM cards for cards which had an embedded chip. The reason was that the existing cards were vulnerable to thieves who could gain knowledge of our secret personal identity number (PIN) and with this knowledge could undertake fraudulent cash withdrawals from our accounts. Some banks obeyed the BSP instruction and issued the new cards on which fraudulent transactions could not be successful.
But many banks did not obey.
BSP then successively moved the implementation date from 2012 to 2013 to 2014, and finally to 2015.
Meanwhile what began as a trickle of fraudulent ATM transactions became a flood.
Our ATM environment was unsafe.
A problem with the banking sector is that, no matter how deplorable the circumstances, the banks retain the upper hand in terms of the dialogue that takes place with its customers. Anecdotal evidence suggests that many customers had difficulty in obtaining refunds when their accounts were harmed by fraudulent ATM transactions.
This is the kind of situation that causes potential customers not to trust banks. A BSP survey carried out in 2017 showed that two-thirds of the population did not have a bank account.
If banks have a problem with this, then they should work harder to ensure a safe environment.
***
In PN last week, Feb. 10, Ignacio Bunye wrote an excellent article as to how BPI is reaching out to unbanked self-employed micro-entrepreneurs (SEMEs).
He mentioned that BPI made loans of between two and 2.3 percent interest rate per month.
Yikes!
This corresponds to an annual rate of charge of between 26.82 percent and 31.37 percent.
If I borrow P100,000 at 2.3 percent per month, then after one year I would need to repay P131,370 to liquefy my indebtedness to the bank.
The much-maligned 5-6 operators, with a more informal way of doing business, do not seem so bad after all.
I hope that BSP’s guidelines will address the issue of the enormous gap that exists between banks’ interest rates offered on customers’ deposits and the borrowing rate that has to be paid by those of us who obtain bank loans.
BSP wants our banking environment to be at par with international standards.
What are normal lending practices in the Philippines would politely be called loan-sharking in other countries.
No wonder the populace is reluctant to use banks./PN
