Bill allowing 60% ownership of Philippine rural banks gets BSP support

The Philippine central bank is supporting the Senate and Lower House bills allowing 60% foreign ownership of rural banks.

Bangko Sentral ng Pilipinas Deputy Governor Nestor A. Espenilla Jr. said developments in the rural banking sector including the future entry of foreign equity will ensure growth of the industry. “I think we have fertile ground on which rural banks can continue to blossom into strong, well-managed, professionally run and responsible banks.”

Espenilla, who heads the BSP Supervision and Examination Sector, said the entry of up to 60 percent foreign equity into rural banks is similar to the policy implemented on other bigger banks, specifically Republic Act No. 8791 or the General Banking Act of 2000 which allows foreign ownership of commercial and thrift banks.

Prior to the amendments, foreign ownership in rural banks is banned under the Rural Bank Act of 1992.

House Bill 5360 which has been approved, amended Section 4 of Republic Act 7353 or Rural Bank Act of 1992 and allowed foreign equity of up to 40 percent of the rural bank’s authorized capital stock.

Senate Bill 3089, in the meantime, is also seeking to allow foreign ownership or the entry of non-Filipino citizens in rural banks.

The author of Senate Bill 3089, Senator Edgardo Angara, said the bill is expected to stimulate a “more lively activity among rural banks by creating an environment that is beneficial to foreign investors, local banking patrons and the national economy.”

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