BSP urged to recalibrate digital banking rules

Rural banks are urging the Bangko Sentral ng Pilipinas (BSP) to revisit proposed prudential rules for technology-driven rural banks, warning that some provisions could unintentionally discourage digitalization and weaken financial inclusion efforts in the countryside.

- KEISHA TA-ASAN

In a position paper submitted to the BSP, the Rural Bankers Association of the Philippines (RBAP) said it supports the regulator’s push to advance financial inclusion through a more digital economy but raised strong reservations over specific regulatory thresholds and capital requirements.

“We fully agree that prudential standards should remain proportionate to the evolving risk profile of rural banks as they transition toward more technology-enabled operations,” the RBAP said.

“However, we hold strong reservations against the manner in which the digitalization of rural banks is proposed to be carried out,” it added.

Among the concerns raised by RBAP is the BSP’s proposal to classify full digital onboarding capability as an indicator of operational complexity, which could trigger higher prudential requirements.

The association said the approach might be too broad and should instead consider whether such capability materially changes a bank’s risk profile.