Promises unbroken, promises fulfilled

The most agonizing part of post-elections scenario is the “waiting period.” Not just waiting for the election results (which could take a month and, in some cases, even years), but also waiting for the campaign promises made by the candidates, especially by Senate and Lower House hopefuls, to come to fruition.

In today’s fast-paced world where the frequently asked question “what have you done for me lately?” has to be answered to remain relevant, the elections’ aftermath commonly asked question is “what will you do for me?” For business enterprises like rural banks, answering this question is paramount.

The rural banking industry has a duty to serve this market in accordance with its mandate, but lawmakers must lay down the enabling environment for rural communities to thrive.

To be fair, Congress—during the last few months prior to the elections—took the rural banking industry a step further by passing a measure amending the Rural Bank Act of 1992, which will allow foreign ownership of rural banks from a minimum of 40 percent to a maximum of 60 percent.

The measure seeks to stimulate more activity among rural banks by creating an environment that is beneficial to foreign investors, local banking patrons, and the national economy. This is expected to level the playing field with thrift and commercial banks, which are currently allowed to take foreign partnerships.

In addition, the hope is that legislators will look favorably to the proposed amendment to Republic Act 7653, or the New Central Bank Act, when Congress reconvenes for its 16th session.

Amendment to the Bangko Sentral ng Pilipinas (BSP) charter did not gain much ground during the last Congress. House Bill 6205 was approved by the Banks and Financial Intermediaries Committee, but was never elevated to the plenary level for debates. On the other hand, in the same counterpart committee, Senate Bill 2742 has been gathering dust and barely completed one hearing.

The BSP has been pushing for this amendment so it can prompt the national government to automatically recapitalize every time its capital reaches dangerously low levels. The BSP’s losses have been mounting because of extensive open market operations to prevent the peso from appreciating further.

Apart from improving the country’s banking sector, the rural banking industry is hoping that lawmakers will also prioritize and faithfully devote their time, effort and energy to the development of rural areas.

As often mentioned in this space, an economically empowered rural community is a key ingredient in improving the overall economic growth of the country. When the poorest of the poor becomes self-reliant and an important contributor to the economy, it is a much more significant and truer sign of economic growth than whatever gain the bourse will have—even if the latter is in record-highs.

In turn, an economically active rural community will likewise elevate the rural banks that serve them in terms of increased deposits, loans and availment of other products.

Published in The Manila Times, 16 May 2013