THE Bangko Sentral ng Pilipinas (BSP) reported on Wednesday that cooperative banks in the country remained “sound and stable” despite the economic disruptions caused by the Covid-19 pandemic.
The BSP also called for immediate passage of the proposed Cooperative Banking Act, which aims to streamline the regulatory requirements for cooperative banks.
“Amid the pandemic, the cooperative banking industry remained sound and stable as shown by the sustained growth of the industry’s total assets,” BSP Governor Benjamin Diokno said in a virtual briefing on Wednesday.
The governor also reported that in the first six months of the year, cooperative banking resources reached P23.9 billion, which accounts for 0.12 percent of the Philippine banking system’s total assets of P19.8 trillion.
The sector’s Capital Adequacy Ratio (CAR), meanwhile, stood at 19.7 percent, higher than the required minimum of 10 percent.
“While the assets of cooperative banks represent a small portion of the banking system, they are at the forefront in the delivery of much-needed financial services, particularly in the countryside,” Diokno said. “Among their clients are hundreds of primary cooperatives and their individual members who usually have limited, or no access to banking services, other than those provided by cooperative banks.”
The governor also expressed his support to the immediate passage of House Bill No. 9541, or the proposed Cooperative Banking Act.
The BSP said the Cooperative Banking Act harmonizes regulations on cooperative banks being carried out by the BSP and the Cooperative Development Authority (CDA).
“The BSP is supporting the Cooperative Banking Bill in line with our commitment to further promote a vibrant cooperative banking sector and foster the growth of rural economies,”
The bill provides that cooperative banks shall be under BSP supervision, but CDA shall still monitor their compliance with cooperative laws and regulations. For rules on governance, the provisions of banking laws, rules, and regulations shall prevail.
Moreover, the bill grants incentives and privileges to encourage the formation and organization of cooperative banks; and provides rules on the registration, regulation, and operation of said financial institutions.
The proposed law also expands the definition of membership in cooperative banks, which is currently limited to cooperative organizations and associations.
“The legislative reform is expected to further promote the safety and soundness of the country’s cooperative banking industry,” Diokno said.
As of end-September 2021, there are 24 cooperative banks in the country with a network of 145 branches and other offices. Cooperative banks are present in Luzon, Visayas and Mindanao.