Manila—(PHStocks)—Bangko Sentral ng Pilipinas (BSP)—The Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) has approved-in-principle on 18 June 2015 the Consolidation Program for Rural Banks (CPRB), a progressive incentive program jointly conceptualized by the BSP, the Philippine Deposit Insurance Corporation (PDIC), and the Land Bank of the Philippines (LBP) to encourage mergers and consolidations among rural banks (RBs).
The CPRB has also been approved by the PDIC Board and the LBP President. It will be available for a period of two years from the signing of the Memorandum of Agreement (MOA) among the BSP, the PDIC, and the LBP, which will contain the terms and conditions as well as other arrangements among the foregoing agencies in implementing the program.
The CPRB sprang from the need to strengthen the rural banking industry, in recognition of the major role that RBs play in financial inclusion. It intends to promote mergers and consolidations among RBs to bring about a less fragmented banking system by enabling them to improve financial strength, enhance viability, strengthen management and governance and expand market reach, among others. Currently, there are 512 RBs operating across the country.
In support of the CPRB, the Countryside Financial Institutions Enhancement Program (CFIEP), consistent with its mandate to improve the countryside financial institutions’ long-term sustainability and viability, will set aside PhP25 million to fund the implementation of the program. The amount will support the financial advisory, business process improvement, and capacity-building support services, necessary to ensure the attainment of the program’s objectives. On its part, the BSP will observe full flexibility in granting regulatory and other incentives allowable under existing banking laws and regulations including BSP Circular No. 237 as amended by Circular Nos. 771 dated 11 October 2012 and 494 dated 20 September 2005.