Inclusive growth remains an elusive dream. While rural banks have focused on the area of countryside development, there remains an enormous gap between the have’s and have not’s, particularly in the area of access to banking. As indicated in an earlier survey by the Bangko Sentral ng Pilipinas, only 25 percent of the total Filipino households have savings account. Of the households with savings, two out of three have bank accounts.
As it celebrates its 56th Charter Anniversary, the Rural Bankers Association of the Philippines— the principal representation of the rural banking industry in the country—once again revisits its role in spearheading countryside development as far as all rural banks are concerned.
While the task admittedly remains daunting despite the entire industry’s best efforts, now is not the time to let go of this goal. Rural banks are still the country’s best hope to provide the countryside much-needed investments to spur local economic development.
With the impending entry of foreign investors and prospective strategic third party investors, rural banks will have the sufficient capital to provide banking services responsive to the needs of the poor it will open the floodgates of the industry to an additional source of capital to expand its services, and contribute in creating a financially inclusive countryside.
Their presence in rural areas, where majority of the poor are, enable rural banks to connect out to the unbanked and underserved population which bigger banks cannot reach. Rural banks primarily serve the agriculture and fisheries sector, which contributed 11 percent of the growth domestic product (GDP) of the country in 2012. Despite contributing a large chunk to the country’s domestic product, it is notable that the GDP contribution of the sector continues to decline over the years. Agricultural and fisheries sector need sufficient funding to hasten its growth.
Rural banks remain relevant and a great necessity to the goal of the government in achieving inclusive growth. The fact that the task remains difficult is not a reason to give up on the dream. It just means that we all have to work doubly harder to achieve it.