Four Camarines Sur legislators made a stronger push for the prompt congressional approval of a measure that would enable roughly 10 million to 34 million unbanked Filipinos, many of them in faraway barrios without any banking presence, to finally open their own bank accounts, in support of the goals of the administration of President Ferdinand Marcos. Jr of accelerated digitalization and greater financial inclusion.

National Unity Party (NUP) president LRay Villafuerte, who is one of the four authors of House Bill (HB) 273 or the “Bangko sa Baryo Act,”  said: “The swift legislative approval of this measure would go a long way for the 19th Congress to help President Marcos achieve his lofty, complementary goals of bridging the country’s digital divide and attaining financial inclusion for all Filipinos.”

“This proposed ‘Bangko sa Baryo Act’ endeavors to attain financial  inclusion for the Filipino people and to establish robust financial consumer protection frameworks.”

Villafuerte said the glaring “disconnect” in the use of digital financial service in the country is “borne out by the reality that despite the dramatic increase in online or e-payments, particularly  in the last two years under the Covid-19 pandemic, an estimated low of almost 10 million to a high of over 34 million Filipinos have no bank accounts yet, apparently because of our leave-much-to-be-desired digital infrastructure coupled with the dearth of banks, especially in remote barrios across the country.”

“It is imperative for us legislators to address this digital disconnect by passing HB 273 in the House and a counterpart bill in the Senate to establish soon enough a banking presence all over the country,” said Villafuerte, in support of President Marcos’ digital transformation and financial inclusion goals and of the  Bangko Sentral ng Pilipinas (BSP)’s Digital Payments Transformation Roadmap (DPTR) and its National Strategy for Financial Inclusion (NSFI) target of onboarding at least 70% of adult Filipinos to the formal financial system by 2023.

For Villafuerte, pursuing financial inclusion and digitalization are complementary in nature, as the BSP said in its DGTB 2020-2023 targets that these two goals are “mutually reinforcing” and “go hand-in-hand, each enabling the other.” 

A bank or transaction account is a basic indicator of financial inclusion and is the most basic tool for making digital transactions, according to the BSP.

Co-authored by the NUP president with CamSur Reps. Miguel Luis Villafuerte and Tsuyoshi Horibata and Bicol Saro Rep. Nicolas Enciso VIII, HB 273 aims to authorize the   BSP to accredit cash agents with a good reputation and credit history to set up shop in retail outlets such as convenience stores, pharmacies, and other highly accessible places, and serve as “last mile” providers of financial services in faraway places with zero bank presence.

“This proposed ‘Bangko sa Baryo Act’ endeavors to attain financial inclusion for the Filipino people and to establish robust financial consumer protection frameworks,” Villafuerte and his co-authors said in HB 273. “It shall increase citizens’ financial literacy and capability so they can understand different financial services. It is hoped that, soon, an average barrio folk will be able to make sound financial decisions and put his or her hard-earned money to beneficial use.”     

In pursuit of digital empowerment, Villafuerte recalled that then-President Duterte issued Executive Order (EO) 170—“Adoption of Digital Payments for Government Disbursements and Collections”—last May 12 that directed all national government (NG) agencies, local government units (LGUs), state universities and colleges (SUCs) and government-owned or -controlled corporations (GOCCs) to tap digital platforms in disbursing and collecting official payments.

To implement EO 170, government agencies led by the Department of Finance (DOF) last week issued its draft Implementing Rules and Regulations (IRR) mandating all these covered government agencies to implement (1) digital disbursements in six months’ time,  and (2) online collections within one to three years, depending on each agency’s operational readiness and capability to do so.

Meanwhile, President Marcos, in his first State of the Nation Address (SONA) and his budget message to legislators for his proposed P5.268-trillion General Appropriations Act (GAA) for 2023, has stressed that digital migration and financial inclusion remain government priorities on his watch. 

With digitalization a top priority of his Administration, the President said in his first budget message last Aug. 22 to Congress that his 2023 GAA plan includes a P12.1-billion investment  in Information and Communications Technology (ICT) infrastructure and skills development “to accelerate our digital transformation.”

President Marcos said this proposed ICT outlay will fund, among others, the National Government Data Center Infrastructure and the National Government Portal “to digitally connect government agencies and enhance their accessibility to the public.”

Earlier in his SONA, the President pitched for digital connectivity nationwide on his belief that “as the world moves into rapid digitalization, the digital divide will become more pronounced. The depth and breadth at which these technologies will be transformative in our lives is fully expected”

Villafuerte said the establishment of a banking presence in all parts of the country is crucial to attaining a more inclusive economy, given the currently skewed usage of digital financial services in which a huge segment of our population is still financially excluded and underserved—as revealed in the  BSP’s 2021 Financial Inclusion Survey (FIS)—because many Filipinos: (1) still have no bank accounts, and (2) refrain from making online financial transactions even if most of them have mobile phones and Internet access.

The World Bank (WB), in its Global Findex Database 2021 report, bared that some 9.23 million Filipino adults remain unbanked and that millions of adults continue to receive government payments in cash only.

But the BSP has a much higher figure of financially excluded Filipinos, as its FIS 2021 bared there were still 34.3 million or 44% of an estimated 77.2 million Filipino adults who remain unbanked in 2021 (from 51.2 million in 2019), as the pandemic had accelerated the use of digital payments.

The least banked or most financially excluded sectors in 2021 were farmers and agricultural workers (73%), followed by workers in private households (48%) and self-employed individuals (45%), said the FIS. 

The same FIS showed that 92% of Filipino adults had a mobile phone and 77% had access to the internet in 2021, and yet only 60% of them performed fund transfers, payments, and other online financial transactions.

Most of these adults who performed online transactions belonged to the Class ABC segment and were mostly from Metro Manila, the FIS bared. 

Villafuerte said the argument for establishing a banking presence—via HB 273—in communities without banks has been buttressed by the FIS 2021 results, showing that six out of 10 Filipinos have demonstrated a change in financial behavior amid the pandemic, as 37% of them have started to save more for emergencies and 17% increased their usage of digital banking and online payments.

The FIS showed that 52% of savers keep their money at home, said Villafuerte, possibly because there are no banks in their communities or it is difficult and costly for them to go to the nearest ones in neighboring barangays or towns.

He said that alongside making  transactions with the government easier and cheaper, digitalization will make the country more investor-friendly as  it would “further improve the ease of doing business (EODB), and (2) minimize official corruption by doing away with face-to-face interactions  as well as the presence of ‘fixers’ in offices offering to expedite transactions for a fee.”

He said that providing unbanked Filipinos with access to useful and affordable financial products and services that meet their needs— transactions, payments, savings, credit, and insurance—will be “a key enabler to reducing poverty and boosting prosperity. At present,  a major obstacle towards financial inclusion is cost—especially those incurred by customers living in far-flung areas who have to consider transportation costs in reaching bank branches.”

HB 273’s authors said their bill is also in line with the BSP’s NSFI 2022-2028, in which the central bank has—according to DOF Secretary Benjamin Diokno—prioritized critical financial infrastructures, including guarantee mechanisms to boost lending to the entrepreneurial poor and other disadvantaged groups.

HB 273 aims to address this problem, he said, by making the State create an enabling regulatory environment for innovations and allow banks to exponentially reach and serve clients more efficiently at the soonest possible time through authorized cash agents (ACAs).

Villafuerte said the “Bangko sa Baryo Act” can—and will—make this happen because, in January 2017, the BSP’s Monetary Board (MB) already approved the guidelines for new bank service channels, “allowing banks, with prior BSP authorization to serve clients through cash agents contracted by banks to accept and disburse cash in its behalf, facilitating online self-service deposits, withdrawals, and fund transfers, as well as bills payment.”

“HB 273 incorporates such BSP guidelines and further enhances the concept of banking through cash agents or ACAs. It shall provide various incentives to any person (applies to both natural and legal) who shall establish its business in the remote areas of the country such as waiver of government fees, free training for personnel, tax benefits, among others.”

A former Camarines Sur governor, Villafuerte said LGUs shall play a crucial role in assigning areas as ‘remote’ and assess the same for the necessity of banking presence” in their respective localities.  

In the bill, Villafuerte and his three co-authors define who shall be cash agents or ACAs and provide for the corresponding eligibility requirements. “The bill shall ensure that agents, as extensions of the banking system, are able to provide professional service, keep records, handle cash and manage liquidity,” they said.

Their bill empowers ACAs “to assist in performing a broad range of bank services, including forwarding account opening applications, cash-in, and cash-out services, and initial customer identity verification—especially for anti-money laundering and combating the financing of terrorism efforts. The contracting bank shall ensure that the cash agent follows standard bank protocols and exercises due diligence when dealing with customers. Ultimately, the banks remain liable for agent actions.” 

A former Deputy Speaker for finance, Villafuerte filed a similar “Bangko sa Baryo” bill in the 17th Congress in response to the new guidelines and regulations issued by the BSP in 2017 allowing banks to extend their service-delivery channels by deploying ACAs, especially in far-flung and unserved communities.

HB 273’s authors said their bill is also in line with the BSP’s NSFI 2022-2028, in which the central bank has—according to DOF Secretary Benjamin Diokno—prioritized critical financial infrastructures, including guarantee mechanisms to boost lending to the entrepreneurial poor and other disadvantaged groups.

As provided for in HB 273, persons may file applications to any Contracting Bank provided that the chosen lender has:  (1) a duly-registered business  in the country; (2) a well-established commercial activity existing for at least three months; (3) a permanent establishment with sufficient capacity to properly operate electronic devices, and (4) the necessary infrastructure to perform banking operations.

HB 273 requires the BSP to create an online evaluation process for ACA applicants and ensure that: such cash agents: (1) demonstrate a good reputation and credit history, including a lack of previous civil and criminal records, and (2) have deposit accounts with their Contracting Banks against which all bank transactions will be conducted.

The Department of Trade and Industry (DTI) is required by HB 273 to direct the Securities and Exchange Commission (SEC) and LGUs to create a mechanism for expediting applicant processing, resulting in a timeline from application to approval.

The LGUs involved are directed, meanwhile, to encourage and provide incentives to ACAs in relation to the purpose of HB 273  and pursuant to the Local Government Code.

The bill allows cash agents to set customer fees and charge customers directly, provided that Contracting Banks and the DTI shall monitor such pricing for signs of exploitation or customer confusion. 

In terms of liabilities,  Contracting Banks are liable for all actions and/or omissions of their respective  ACAs, and this responsibility extends to actions of the Cash Agents even if not authorized in the contracts, so long as they relate to banking and related services.



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