WHEN Finance secretary Carlos G. Dominguez III was guest speaker at a gathering of a leading banking group in July, 2018 he was quoted in his speech that 86 percent of Filipinos were still unbanked.
“That is an intolerable ratio of the population excluded from the financial mainstream,” he emphasized, “and we aim to reduce this number dramatically over the years.”
What is now happening, however, contrary to the policy pronouncement of our Finance secretary, is that Bangko Sentral (BSP) continues to close even long-established rural banks for unexplained infraction of its rules.
Since the middle of July, 2018 after Finance secretary Dominguez made his policy stand, seven more banks were closed by Bangko Sentral, or a total of 12 banks shuttered for that year, in addition to the five padlocked earlier.
For 2019 there were already four banks ordered closed by Bangko Sentral for alleged infraction of regulations, including the most recent one, Valiant Bank in Iloilo on May 16, 2019. It was taken over by the Philippine Deposit Insurance Corp. (PDIC) on the 17th in its capacity as receiver to refund deposits and liquidate the bank.
Valiant Bank with head office on A. Mabini Street, Iloilo City has eight branches located at the municipalities of Banate, Dueñas, Estancia, and Sara in Iloilo province; two in Capiz at Roxas City and Sapian; one in San Jose, Antique; and one in Bacolod City, Negros Occidental. The closed bank has 6,567 deposit accounts with a total balance of P480.7 million, of which 85 percent or P412.5 million are insured deposits. All valid deposit claims up to P500,000 will be paid by PDIC.
What happened, Secretary Dominguez, Sir? We thought that as a member of the Monetary Board (MB) chaired by Bangko Sentral Governor Benjamin E. Diokno, you will walk your talk as you vote on the issue in the Board.
Whatever be the violations, we believe a bank the size of Valiant Bank that has accumulated 6,567 deposit accounts through the years can be corrected. Or, in a worst case scenario, it can be taken over by a bigger rural bank or a commercial bank but we must not allow its closure. The idea is to keep the trust and confidence of depositors in the banking system.
In the year 2000 when we were privileged to serve as national director in the Rural Bankers Association of the Philippines (RBAP), there were about 1,500 rural banks at that time operating in various parts of the country.
According to an updated list issued by Bangko Sentral as of September 2017, only 102 rural banks are left operating. Even counting branches, we do not believe their number can now reach 500 units.
The Financial Inclusion Survey by BSP reports that of our population of more than 100 million, only 15.8 million of Filipino adults have deposits in banks as of 2017. Unless Bangko Sentral changes its policy of closing banks rather than just correct or rehabilitate them for violation of its rules, the ratio of our population outside the financial mainstream will only worsen.
Let us stop bank closures, especially of rural banks which in many cases is the only one operating in outlying areas of the country where banking services are more needed.
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GEM OF THOUGHT
“Amidst all the business of life, do you hear God’s whisper? It will calm your soul, bring peace to your heart and quiet your mind.” – Anonymous (For comments or re-actions, please e-mail to jnoveracompany@yahoo.com)PN
None of the stories about Valiant Bank explains why it was closed. What is the problem that is so drastic? The reports do not say.