With digital transactions fast becoming the new norm as the country starts to recover from the pandemic-driven economic recession, Camarines Sur Rep. LRay Villafuerte has called for the swift congressional approval of a House-approved measure that aims to provide last-mile financial connectivity in unbanked communities nationwide through electronic means.
Villafuerte said the swift congressional passage of House Bill (HB) No. 6924 or the proposed Bangko sa Baryo Act will accelerate President Duterte’s goal of financial inclusion for all Filipinos and open new livelihood opportunities in faraway communities either unserved or underserved by the formal banking system.
“We can leverage digital technology to convert convenience stores, pharmacies and other highly accessible retail outlets to act as additional service delivery channels of banks, especially in unbanked communities, by acting swiftly on this measure,” said Villafuerte, a lead author of the proposed Bangko sa Baryo Act.
Citing a study commissioned by the digital banking solutions provider Backbase, Villafuerte said unbanked and underbanked segments in the Philippines are expected to decline to 20 percent of the bankable population because more Filipinos are willing to shift to digital banking amid the pandemic.
Villafuerte said that while the BSP already has the regulations in place for the establishment of cash agents for accredited banks, it can only realize its goal of making 70 percent of adult Filipinos financially inclusive by ensuring that banks focus their off-branch operations in far-flung areas through the passage of the Bangko sa Baryo bill.
Based on the second edition of the Fintech and Digital Banking 2025 (Asia Pacific) IDC report commissioned by Backbase, three out of five or 60 percent of bankable Filipino customers are willing to shift to digital banking.
Villafuerte said the Congress can help the Bangko Sentral ng Pilipinas (BSP) meet its target of at least 70 percent of adult Filipinos having bank accounts by December 2022 at the earliest, with the swift passage of the proposed Bangko sa Baryo Act, which would enable banks to reach farflung communities by tapping retail outlets as their cash agents.
HB 6924 was approved by the House of Representatives on third and final reading in August last year.
A counterpart measure has been filed by Sen. Grace Poe Llamanzares that remains pending in the Senate.
Since 2017, the BSP has already authorized retail outlets such as stores and pharmacies to operate as cash agents through its Circular 940, and allowed banks to set up branch-lite units (BLUs) through Circular 987, in line with its goal of at least 70 percent of adult Filipinos having bank accounts as early as December 2022 or by 2023.
As a result, around 40,000 cash agents have been actively operating in the country along with over 1,800 BLUs before the onset of the Covid-19 pandemic, according to the BSP.
Villafuerte said that while the BSP already has the regulations in place for the establishment of cash agents for accredited banks, it can only realize its goal of making 70 percent of adult Filipinos financially inclusive by ensuring that banks focus their off-branch operations in far-flung areas through the passage of the Bangko sa Baryo bill.
“We can leverage digital technology to convert convenience stores, pharmacies and other highly accessible retail outlets to act as additional service delivery channels of banks, especially in unbanked communities, by acting swiftly on this measure.”
Under HB 6924, a cash agent may file an application with a contracting bank if it meets the following requirements: it is a duly-registered business in the Philippines; has engaged in commercial activity for at least three months; has conducted commercial activities continuously in a place and area that is known to the public; has sufficient capacity to properly operate electronic devices; and has the necessary infrastructure to undertake banking operations.
The contracting bank will be responsible for deploying to their cash agents the devices that will enable customers to perform secure online, real-time deposit and withdrawal transactions on their own bank accounts, fund transfers, bills payment, and self-service transactions, the bill states.
Cash agents may accept and disburse cash on the bank’s behalf in connection with self-service transactions of customers that include deposits and withdrawals, fund transfers, bills payment and payment to government institutions such as the Social Security System (SSS), Philippine Health Insurance Corp. (PhilHealth) and others.
Under the bill, cash agents may also collect and forward applications for bank account openings and loan application documents to the contracting bank; perform initial customer identity verification for the purpose of conducting due diligence investigations and preventing illegal activities; and conduct other transactions, including accepting payments and cheque encashment.
To encourage cash agents to set up in remote areas, they will be entitled to incentives, such as free training on banking services, expedited processing of the necessary permits and certificates, including those issued by the local government units (LGUs), the bill states.
HB 6924 prohibits cash agents from subcontracting its operations or business to third parties.