The Bangko Sentral ng Pilipinas (BSP) said it is strongly supporting the immediate passage of the proposed Cooperative Banking Act to streamline regulatory requirements and expand the members of cooperative banks.

(Photo courtesy of the Department of Agriculture)

BSP Governor Benjamin E. Diokno said Wednesday, Oct. 20, that the proposed bill will encourage more cooperative banks to be set up since there will be additional incentives and privileges as well as tax exemptions including the national and local taxes, fees and charges.

“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,” said Diokno during his weekly online press briefing. “The legislative reform is expected to further promote the safety and soundness of the country’s cooperative banking industry,” he also said.

House Bill No. 9541, filed last May 31, harmonizes BSP and the Cooperative Development Authority’s (CDA) regulations on cooperative banks. On September 8, a counterpart bill or Senate Bill No. 2392, was also filed.

Diokno said the proposed law expands the definition of membership in cooperative banks, which is currently limited to cooperative organizations and associations. The bill defines cooperative banks as those organized for the primary purpose of providing a wide range of financial services to cooperatives and their members and the public.

In the proposed bill, the definition of regular members now includes: those individuals who are members of a cooperative, as well as foreign cooperatives. “Likewise, the bill allows an individual, who is not a member of any cooperative to become an associate member,” said Diokno.

The proposed bill will also improve both the BSP and CDA regulations of cooperative banks. “The BSP shall continue to prescribe fit and proper qualifications of bank directors and officers while at the same time giving due recognition to the unique nature and character of coop banks,” said Diokno.

He said that for rules on governance, the provisions of banking laws, rules, and regulations will prevail.

As of end-September, there are 24 cooperative banks with 145 branches.

“Amid the pandemic, the cooperative banking industry remained sound and stable as shown by the sustained growth of the industry’s total assets,” said Diokno.

Cooperative banking resources as of end-June this year have reached P23.9 billion which is 0.12 percent of the banking system’s total assets of P19.8 trillion. Cooperative banks’ average capital adequacy ratio currently is 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,” said Diokno. “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,” he added.

Source: Manila Bulletin (