The country's financial regulators are pushing for consolidation among rural banks to achieve a stronger and less fragmented banking system. Following the launch of the Consolidation Program for Rural Banks (CPRB), the Philippine Deposit Insurance Corporation (PDIC) and Bangko Sentral ng Pilipinas (BSP) are now accepting applications for availments under the program until August 25, 2017.

CPRB is a bank strengthening program specifically designed for rural banks to help enhance their viability and ability to promote financial inclusion and financial stability in their respective communities. The CPRB manifests the recognition by PDIC and BSP, in cooperation with the Land Bank of the Philippines, of rural banks' importance in providing essential financial services to their niche markets. The CPRB is also in support of the government's thrust for financial inclusion, given the rural banks' strategic advantage of reaching the unserved and underserved, and empowering them with improved access to formal financial services.

PDIC President Cristina Que Orbeta encouraged rural banks to take advantage of the CPRB especially in the face of increased competition brought about by the integration of financial markets in the Association of Southeast Asian Nations (ASEAN) region. "I trust that rural banks will endeavor to expand their horizons, create the possibilities and opportunities for their business and look at CPRB as a window of opportunity to expedite their decision-making process," she said.

The CPRB, through the Countryside Financial Institutions Enhancement Program, will provide funding assistance for financial advisory services, business process improvement services, and capacity-building support services. These include training on credit evaluation and administration, audit and internal control, personnel management, accounting/record keeping, treasury, information technology, and governance. Regulatory incentives from the BSP may also be availed of as part of CPRB's program support.

Rural banks availing of the CPRB are set to benefit from several support services and regulatory incentives to improve their financial strength, enhance their viability, strengthen management and governance, generate synergies and economies of scale, and expand their market reach. It is envisioned that the resulting bank from the CPRB shall have a risk-based capital adequacy ratio (RBCAR) of at least 12% and a combined unimpaired capital of at least PHP100 million. The program welcomes any group of at least five rural banks whose head offices or majority of the branches are located in the same region or area. Rural Banks whose head office is located in a nearby region may also be included, provided that the program objectives are met.

Participating rural banks must submit to PDIC three sets of the following documentary requirements: letter of intent; duly accomplished CPRB application form; Board Resolution and Stockholders' Resolution approving the consolidation; Secretary's Certificate of Adoption of Board Resolutions containing approval of request for availment of funding support; memorandum of agreement (MOA) signifying the banks' commitment to comply with CPRB requirements; memorandum of undertaking (MOU) indicating their commitment to abide by the program's terms and conditions; duly executed Confidentiality Agreement; and copy of the proponent banks' latest audited financial statements. PDIC reiterated that it will only receive complete sets of requirements from interested banks. The implementing guidelines of CPRB as well as requirements are contained in PDIC Bulletin No. 2016-03, which is available at the PDIC website, www.pdic.gov.ph.

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The Philippine Deposit Insurance Corporation (PDIC) was established on June 22, 1963 by Republic Act 3591 to provide depositor protection and help maintain stability in the financial system by providing permanent and continuing deposit insurance. Effective June 1, 2009, the maximum deposit insurance coverage is P500,000 per depositor. All deposit accounts by a depositor in a closed bank maintained in the same right and capacity shall be added together. A joint account shall be insured separately from any individually-owned deposit account.

PDIC news/press releases and other information are available at the website, www.pdic.gov.ph.