BSP raises minimum capital requirement for rural banks

The Bangko Sentral ng Pilipinas (BSP) has raised the minimum capital requirement for rural banks as part of efforts to boost the local banking sector’s competitiveness.

In a statement on Friday, the central bank said its policy-setting Monetary Board approved amendments to the minimum capitalization of rural banks.

In particular, the Monetary Board approved the amendments to Section 121 of the Manual of Regulations for Banks (MORB) as part of the Rural Bank Strengthening Program (RBSP).

“The revised minimum capital requirements shall result in stronger and well-capitalized rural banks underpinning a Philippine banking system that is stable, sound, resilient and inclusive for Filipinos,” said BSP Governor Felipe Medalla.

“With a strengthened capital base, rural banks would be able to withstand adverse financial shocks and at the same time, tap opportunities to enhance income potential, expand banking operations, and provide better credit facilities and services responsive to the needs of their clients and the banking public,” he added.

The new minimum capital levels of rural banks are as follows:

• P50 million for head office only and those with up to five branches
• P120 million for those with six to 10 branches
• P200 million for those with more than 10 branches

The previous regulations set the minimum capital required for rural banks from P10 million to P200 million, depending on the area of operations of head offices and branches as well as the number of branches.

The BSP said that in view of the liberalization in branching regulations and digitalization of banking services, “the tiering of the new minimum capital requirements for rural banks only considers the rural banks’ network size as indicated in the number of branches (including head office) and no longer considers their area of operations.”

The central bank said affected rural banks, including those which were already authorized by the Monetary Board to establish a rural bank, shall be given five years to comply with the new minimum capital requirements by referring to the available options under the RBSP such as merger/consolidation, acquisition/third party investment, (voluntary exit/upgrade of banking license, capital build-up program (CBUP), and supervisory intervention.

Rural banks availing of the capital build-up track under the RBSP must submit to the Bangko Sentral an acceptable CBUP within prescribed timelines, the BSP said. —Ted Cordero/KBK, GMA News