BSP backs bill to further boost coop banks

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is pushing for the immediate passage of a bill that aims to streamline the regulatory requirements and further strengthen cooperative banks in the country.

In his weekly virtual press conference, BSP Governor Benjamin Diokno said the regulator is supporting House Bill 9541 or the Cooperative Banking Bill filed last May that harmonizes regulations on cooperative banks being carried out by the BSP and the Cooperative Development Authority (CDA).

“The BSP is supporting the Cooperative Banking Bill in line with our commitment to further promote a vibrant cooperative banking sector and foster the growth of rural economies,” Diokno said.

The bill provides that cooperative banks shall be under BSP supervision, but CDA shall still monitor their compliance with cooperative laws and regulations. For rules on governance, the provisions of banking laws, rules, and regulations shall prevail.

Moreover, it also grants incentives and privileges to encourage the formation and organization of cooperative banks; and provides rules on the registration, regulation, and operation of said financial institutions.

Diokno said the proposed law also expands the definition of membership in cooperative banks currently limited to cooperative organizations and associations.

“The legislative reform is expected to further promote the safety and soundness of the country’s cooperative banking industry,” the BSP chief said.

The BSP was instrumental in consolidating House Bills 2435, 7765 and 7878 on the Cooperative Bank Law paving the way for the consolidated version under House Bill 9542. A counterpart version was filed in the Senate under Senate Bill 2392 last Sept. 8.

The regulator is looking to continuously coordinate with Congress, the CDA, and the cooperative banking industry on the passage of the bill.

Amid the pandemic, Diokno said the cooperative banking industry remained sound and stable as shown by the sustained growth of the industry’s total assets that amounted to P23.9 billion as of end-June or 0.12 percent of the Philippine banking system’s total resources of P19.8 trillion.

He said the industry’s capital adequacy ratio (CAR) stood at 19.7 percent, or more than the required minimum of 10 percent.

“While the assets of cooperative banks represent a small portion of the banking system, they are at the forefront in the delivery of much-needed financial services, particularly in the countryside,” Diokno said.

Among the clients of cooperative banks are hundreds of primary cooperatives and their individual members who usually have limited, or no access to banking services, other than those provided by cooperative banks.

As of end-September, there are 24 cooperative banks in the country with a network of 145 branches and other offices nationwide.