Metro Manila (CNN Philippines) — Over the next few years, new banks could start operating in the country.
The Bangko Sentral ng Pilipinas (BSP) announced on Wednesday (February 10) that its Monetary Board (MB) approved the gradual lifting of a moratorium on the granting of licenses for the establishment of new banks.
The approval comes in two phases. The first, which takes effect until end-2017, grants thrift banks the opportunity to apply for a license to convert into a universal or commercial bank. The second phase begins on January 1, 2018, from which point all restrictions on the granting of all new bank licenses shall be fully lifted.
In order to foster greater financial inclusion, authorities will waive application and licensing fees for new banks in unbanked areas as well as for microfinance-oriented thrift and rural banks.
“This initiative provides local businesses the avenue to explore opportunities in the banking sector amid the opening of the industry to foreign capital infusion. The two-year transition period also gives interested parties ample time to strategically position themselves in line with evolving policy reforms and regional integration efforts,” said BSP Governor Amando Tetangco Jr., who is also chairperson of the MB.
According to the BSP, the previous moratorium took effect in 1999 as a policy initiative to encourage mergers and consolidations to facilitate the establishment of larger and stronger financial institutions. However, the granting of license for new banks in unbanked areas, as well as for microfinance-oriented thrift and rural banks were exempted form this freeze.
The move comes amid the government’s push for greater liberalization in the banking sector. In 2014, President Benigno Aquino III signed into law Republic Act 10641, which allows the full entry of foreign banks into the country. The legislation also allows such entities to own up to a 100 percent stake in local banks.
