Mandated credit, bank secrecy: Is it time to reconsider our approach?

ON THE SIDELINES of The Asian Banker's Finance Philippines 2025 forum in August, Bankers Association of the Philippines (BAP) President Jose Teodoro K. Limcaoco told reporters that mandatory credit lending rules and strict bank secrecy laws "have become constraints in today's labor-driven financial marketplace.

- By Pierce Oel A. Montalvo

"By modernizing these laws, we create a fertile ground for tech-driven analytics, smart risk management, better credit assessment, and a more competitive and transparent banking sector," added Mr. Limcaoco, who also serves as the president and chief executive officer of the Bank of Philippine Islands.

These calls for reform continue to echo throughout the banking industry. Last October, six major business groups in the Philippines, including the Makati Business Club (MBC) and the Management Association of the Philippines (MAP), signed a joint statement calling to amend the country's bank secrecy laws.

Likewise, mandatory credit lending policies continue to be dragged into practice. The Asian Development Bank said that credit for micro, small, and medium enterprises (MSMEs) remained limited in the Philippines during 2024.

"The continued enforcement of the Magna Carta's remaining provisions, alongside central bank oversight, underscores the government's ongoing commitment to MSME development," it said regarding the Philippines in its Asia Small and Medium-Sized Enterprise Monitor 2025 report.

"However, the stalled legislative amendments highlight the need for renewed policy attention to ensure the law remains responsive and effective in addressing current MSME challenges."

With players, policy groups, and regulators of the banking industry all pointing in the same direction, the question is no longer whether reform should happen — but when, and how.

BANK SECRECY

"The language of existing laws on bank secrecy makes the Philippines the only country to still have restrictive bank secrecy policy," the Bangko Sentral ng Pilipinas (BSP) said in its 2024 legal primer on the laws on secrecy of bank deposits.