The proposal will allow rural banks to offer services to more clients, especially in far-flung areas, an official of the Rural Bank Association of the Philippines (RBAP) said.
The initiative involves appointing merchants – such as sari-sari stores – "which have the ability to service significantly larger amounts," RBAP past president Tomas Gomez IV said in a briefing.
By allowing these small establishments to handle bigger amounts through electronic banking, these merchants may also be able to offer financial services to their clients.
"The sari-sari store has already the infrastructure but it requires additional training and management. I cannot pre-empt what the BSP is saying [regarding the proposal]. Is it a practical from a business model point of view? Yes. It is a win-win for everyone," Gomez told reporters.
The RBAP, in partnership with GCash, Globe Telecom Inc.’s mobile banking platform, also seeks to appoint more merchants.
"Rural banks have accredited some merchants locally. What we want to do is expand that so not only the merchants accept the payments through GCash but eventually be able to open accounts as agents," Gomez told reporters.
But at the same time, he admitted the presence of 'murky issues,' including the banking industry’s 'know your customer' rule.
"It is an obstacle but it it is critical in the light of the AMLA [Anti Money Laundering Act]," he told reporters.
GCash is Globe Telecom Inc.’s flagship mobile banking service launched in October 2004, giving Globe and Touch Mobile subscribers access to a cashless method for remittance, donations, loan settlement, disbursement of salaries or commissions, and payment of bills and products.
"Through mobile phone banking services partnered with local agents, assuming if allowed in an expanded way, then we have an extension of our infrastructure. This can be made possible by technology and partners by GCash and Smart Communications Inc. eventually," Gomez said.
Gomez, who is currently the chairman of the Rural Bankers Research and Development Foundation, Inc., said rural banks have more access to the smallest-income individuals or business enterprises mostly in the agriculture and agrarian sectors.
"Sari-sari stores can generate businesses as well. Why is it good for the local community? Before, they need to travel an hour before they can have access to banking services," he added.
The rural bank sector releases approximately PhP 2.7 billion loans every month as working capital for micro-entrepreneurs.
As of end-2008, it accounts for more than 30 percent of the total number of micro-entrepreneurs served nationwide accounting for 50 percent of the value of total loans to this sector.