BSP raises capital requirement for rural banks

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THE Bangko Sentral ng Pilipinas has approved an increase to the minimum capitalization of rural banks.

The BSP said the move, which is part of the Rural Bank Strengthening Program (RBSP), will enable rural banks to enhance risk management systems, upgrade resources and manage operational costs, meet prudential standards and accelerate digital transformation.

The minimum capital level of rural banks are revised 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 over 10 branches

“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,” BSP Gov. Felipe Medalla said in a statement.

“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 central bank said affected rural banks have five years to comply with the new minimum capital requirements by referring to the available options, such as mergers or consolidation, acquisition or third party investment, voluntary exit or upgrade of banking license, capital build up program and supervisory intervention.