BSP eases rules on bank service channels

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has relaxed rules governing service channels for banks and deposit taking activities outside bank premises.

BSP Deputy Governor Nestor Espenilla Jr. said in a chance interview the changes would allow banks to expand their reach and serve clients more efficiently.

Under the newly approved regulations, banks are now allowed to serve clients through cash agents. Cash agents will accept and disburse cash on behalf of the banks, facilitating online self-service deposits, withdrawals and fund transfers, as well as bills payment.

Furthermore, cash agents can also perform Know-Your-Customer procedures as well as collect and forward application documents for loan and account opening.

They may also sell and service insurance products as authorized by the Insurance Commission.

Cash agents are typically cash-rich third-party entities with many outlets that conduct regular business in fixed locations anywhere in the country, such as convenience stores, pharmacies and other highly accessible retail outlets.

The BSP said the cash agents enable banks to leverage on innovative digital solutions to serve a wider client base, particularly in the low-income and rural areas where the commercial incentives to set up a full branch or even a micro-banking office are limited.

The new regulations are seen to help serve the large base of unbanked and low-income segments.

Data from the BSP shows more than 36 percent of all the municipalities in the country have no banking presence although most of these are served by a variety of non-bank financial institutions like pawnshops, cooperatives and lending investors.

Likewise, the BSP also relaxed existing regulations on offsite deposit servicing. This was done by removing highly prescriptive operational requirements and conditions for banks.

With the new rules, banks have more flexibility in designing appropriate and cost-efficient ways to render deposit pick-up and delivery services and as a result, enhance client experience.

However, despite the relaxed rules, the BSP said banks must ensure the safety and soundness of the banking system as well as uphold consumer protection.

It said the recently approved guidelines emphasize banks’ responsibility for ensuring the adequacy of risk management and internal control systems for the liberalized deposit servicing activities. 

As such, the BSP would evaluate the quality and sufficiency of the risk management and control systems before granting authorization to perform banking services outside bank premises.