BSP imposes 2-year ban on EMI licensing

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has imposed a two-year moratorium on the issuance of electronic money issuer (EMI) licenses to non-banks, but has given non-bank financial institutions until Dec. 15 to file their applications with the regulator.

BSP Governor Benjamin ­Diokno said the Monetary Board has approved the policy measures in handling applications of non-banks to operate as EMI-others, to ensure that its resources are managed and mobilized judiciously in a manner that promotes financial stability and inclusive growth as well as advances the development of innovative electronic money solutions that offer strong value propositions.

“In this regard, the regular application window for new EMI-others licenses for non-bank financial institutions shall be closed for two years, starting Dec. 16, 2021,” Diokno said.

The BSP chief pointed out that all applications received until Dec. 15 would be processed on a first-come, first-served basis and would be assessed for completeness and sufficiency of documentation or information as well as compliance with the licensing criteria.

Diokno said applications with noted deficiencies would be returned and no longer be processed as non-bank EMI applicants are expected to ensure compliance with the documentary and chartering pre-qualification requirements.

To provide a mechanism by which entities that offer strong value propositions may be able to participate in the digital payments and financial ecosystem, Diokno said interested new non-bank EMI applicants with proposals involving new business models as well as unserved, targeted niches, and new technologies could request for exception under the Test-and-Learn or Regulatory Sandbox framework.

“The BSP may limit the total number of entities that will avail themselves of the test and learn pathway, taking into account the total number of applications received and assessment of the overall banking and payment system situation,” Diokno said.

As of end-October, the BSP had issued licenses to 35 non-bank EMIs or EMI-others as well as to 29 banks. Licensed EMIs provide money transfer or remittance services using electronically stored money value system and similar digital financial services.

Earlier, the central bank also imposed a three-year moratorium on the grant of licenses to digital banks as it limited the number of players in the new banking classification to six.

The Monetary Board granted digital banking licenses to Overseas Filipino (OF) Bank of state-run Land Bank of the Philippines, Tonik Digital Bank, UNObank, Union Digital Bank of Aboitiz-led Union Bank of the Philippines, GOtyme – a joint venture between the Gokongwei Group and Singapore-based digital bank Tyme, and Maya Bank of PLDT’s Voyager Innovations and PayMaya Philippines.

The moratorium allows the BSP to monitor the performance and impact of digital banks on the banking system and their contribution to the financial inclusion agenda.

Under its Digital Payments Transformation Roadmap, BSP acting Deputy Director Birdget Rose Mesina-Romero said the central bank aims to convert 50 percent of total retail transactions to electronic channels and raise the number of Filipino adults with bank accounts to 70 percent by 2023.