Rural banks play a pivotal role in promoting inclusive development especially in the countryside by providing credit to primary food producers such as farmers, fisherfolks and small businesses that commonly belong to the most marginalized sectors of the economy, a top government official said.
Development Bank of the Philippines (DBP) president and chief executive officer Emmanuel G. Herbosa said rural banks are natural partners of development financing institutions (DFIs) that seek to broaden their presence especially in municipalities experiencing economic resurgence.
“Rural banks are the cutting edge as they know the needs of the communities that they serve,” Herbosa said. “Together with development financing institutions such as the DBP, they can catalyze the rural economy and make it robust.
DBP is the eight largest bank in the country with assets totaling P669.75-billion as of end-2018. It provides loans to strategic sectors such as infrastructure and logistics, small and medium enterprises, social services and community development and environment.
DBP has a branch network of 137 branches including 10 branch lite units that cater mostly to underserved and unbanked communities in the country. The bank also offers digital banking services to rural banks that cover disbursement and collection services and cash management solutions through the DBP Digital Banking Portal or DBP2.
Herbosa said rural banks and DFIs should work together in expanding financial inclusivity and implement mechanisms to cover the unbanked sectors such as the agricultural and rural workers.
He said apart from expanding its branch network and increasing the number of its automated teller machines, DBP is implementing a host of reform programs that will improve operating procedures, automate critical processes, upgrading credit risk capabilities to enhance service to the underserved communities.
“These initiatives would allow DBP to deliver meaningfully to our proven credits while giving financial advisory to upgrade marginal credits,” Herbosa said.
Based on latest data, there are close to about 500 rural banks across the country with a combined asset base of P229.9-billion as of end-March this year, which account for a 1.35 percent share of the Philippine banking system’s total assets of around P17.2-trillion.