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On incentivized loans. We have lowered the credit risk weight of current MSMEs loans to 50 percent from 75 percent for the rated MSMEs portfolio and 100 percent for the non-rated MSMEs portfolio.
In addition, the new loans denominated in pesos to MSMEs and certain large companies that were seriously affected by the pandemic will be recognized as alternative forms of compliance with the reserve requirements of savings banks compared to deposit liabilities and deposit substitutes. .
At the end of July 2020 (most recent data), savings banks were able to grant a total of P80 billion of loans to MSMEs. These were used as an alternative compliance of savings banks with reserve requirements at the end of September 2020.
To allow independent savings banks to continue supporting their rural community clients, BSP deferred implementation of the revised risk-based capital framework applicable to independent savings banks.
The revised capital adequacy framework will take effect on January 1, 2023 instead of January 1, 2022.
We heard CTB’s request that the minimum liquidity ratio of independent TB and R / CB be reduced from 20% to 16% until the end of December 2020.
On Promotion of continuous access to financial services. This ensures access to formal financing channels for retail customers, who would be deeply affected by community quarantine agreements.
We have relaxed the KYC requirements, such as the presentation of valid IDs by retail clients and micro-business owners to facilitate their access to formal financing channels.
The BSP provided operational relief measures for foreign exchange transactions by savings banks authorized to conduct foreign exchange transactions to facilitate public access to foreign exchange resources to finance legitimate transactions.
On support for the ongoing provision of financial services. The BSP provided operational assistance measures to help BSP-supervised financial institutions focus their limited resources on providing financial services and support their subsequent recovery efforts.
The BSP also provided relief from not imposing penalties for legal reserve deficiencies for a period of six months subject to BSP approval.
In addition, the sanction that can be imposed for reserve deficiencies has been relaxed and subjected to a reduced ceiling until March 31, 2021.
In addition, the notification requirements related to changes in banking days and hours and the temporary closure of banking units and offices / service units of supervised financial institutions and the submission of documentation requirements for Type C licenses are they relaxed even more.
Going forward, we reaffirm our continued partnership with CTB in pursuit of the remaining financial sector reforms.
Our “test and learn” or regulatory sandbox approach continues to be useful in dealing with the growing digital financial innovations on the market.
One of the important outcomes of our “test and learn” approach that has graduated to full implementation involved a pioneering rural bank contracting with a cloud service provider for its core banking system.
In fact, a critical transformation already underway in the banking industry is the shift to the “cloud” as more than 20 financial institutions have transitioned to hosting their core banking solutions in the cloud.
However, there has been uneven acceptance of cloud banking among the industry, with rural banks accounting for a disproportionately larger share of cloud users.
This is something we hope to understand further through discussions with the industry.
For savings banks, this should mean two things. First, the move to the cloud should be seen as an opportunity, as even rural banks have maximized the benefits of scalability of financial services, from mobile and electronic banking to near-field communications (NFC) payments. . Second, savings banks must embrace the change in mindset from a “physical” thinking to embracing the promise of digital transformation by providing crucial banking services to their customers.
Additionally, smaller savings banks can take advantage of this available digital technology to reduce operating costs.
The opportunities are limitless, but the risks, business synergies and contribution to growth must be carefully considered.
The COVID-19 pandemic has also accelerated the digitization of financial services to support resilience.
Innovative solutions could support the reopening of the economy and minimize the resurgence of the virus.
Widely reliable and affordable Internet access will be critical to ensuring business continuity in the new normal.
The shift towards e-commerce, digital financial services, digital public service and the provision of social protection that started during the lockdown will likely continue even after the lockdowns are relaxed.
Under its Digital Payment Transformation Roadmap, the BSP aims to switch at least 50 percent of retail payment transactions to digital, and make at least 70 percent of adult Filipinos own an account. of transactions by 2023.
The savings banking industry has to accept and be prepared for the opportunities and realities under the new economic arrangements.
Let me also congratulate the 12 savings banks that offer PESONet payment transactions and the eight savings banks that offer the InstaPay platform to send and receive payment services and the four savings banks that provide payment receiving services. You are among the drivers of the Digital Payment Transformation Roadmap.
However, we are also aware of the risks involved and the unintended consequences of these events.
In this area, we rely on our long-standing partnership with the Chamber of Savings Banks to help us mitigate the effects of technology-related risks, promote financial integrity and transparency in financial transactions while working to maintain resilience. and stability of the banking system.
Ladies and gentlemen, disruptive technology and the COVID-19 pandemic are dramatically changing the future of the financial services industry.
There are rough seas and strong headwinds coming from these two realities. But we must not lose sight of our collective goal of keeping the banking system in balance so that it continues to support economic recovery and long-term growth.
Together, we can work to develop a safer, more dynamic, more digital, and more inclusive banking system for the banking public. Mabuhay ang Chamber of Thirft Banks and we wish you all a meaningful convention ahead!
Thank you all!
