Market Expansion through Microfinance-Banking Offices (MBOs)

September 12-13, 2011RBAP Conference Room, RBAP Building

Intramuros, Manila

Outline

• Planning for Success– Market Research– Modeling an MBO– Using MicroPinoy for Financial Projections– Piloting MBO operation

• Completing the BSP requirements• Organizing the MBO

MBO Expansion StepsMarket Research

• Stage 1

• BSP Approval

Modeling MBO Operations

• Complete Stage 2 Requirements

Organize MBO Team

• Stage 2

• BSP Approval

What is an OBO?• Refer to any permanent office or place of business

in the Philippines other than the head office, branch or extension office which engages in anyor all of the following non-transactional banking-related activities.

Market loans, deposits and other bank products and;

Accept loan applications and conduct preliminary credit evaluation as well as perform credit admin support services;

Host on-site automated teller machines (ATMs) Perform customer care services

What is an MBO?• Refer to an OBO that primarily caters to the banking

needs and services of microfinance clients and overseas Filipinos (OFs) and their beneficiaries. Microfinance clients are micro-credit borrowers and micro-depositors.

• In addition to the non-transactional banking related activities and services allowable for regular OBOs, MBOs may also engage in any or all of the following limited transactional banking activities and services:

Transactional Banking Activities and Services Accept micro-deposits including initial deposits and service withdrawals

thereof; Accept check deposits of microfinance clients for collection and credit

deposit accounts; Disburse/release proceeds of micro-loans and collect loan amortization and

related charges; Present, market, sell and service microinsurance products in accordance

with existing regulations; Receive/pay out funds in connection with authorized remittance

transactions; Act as cash/money in and cash/money out for electronic money (e-money)

transactions; Collect premiums/pay out benefits from/to members of social security

institutions such as GSIS, SSS, Philhealth, ECC and other gov’t authorized pension and benefit system;

Pay-out benefits under gov’t- sponsored conditional cash transfer schemes; Accept utilities payments; and Purchase foreign currencies up to the maximum equivalent of USD300 per

client per day for credit micro-deposit accounts.

Conditions for MBO Establishmenta. An MBO shall only perform the transactional

activities it has specifically applied for and had been authorized by the BSP to perform. Subsequent enhancements are likewise subject to prior BSP approval;

b. The bank shall ensure the timely accounting and proper recording of financial transactions and observe adequate internal control procedures.

c. The bank president shall submit within 30 calendar days from the end of financial year a comprehensive statement under oath that all the bank’s OBOs and their activities are duly authorized by the BSP

Conditions for MBO Establishmentd. CAMELS composite rating of “3” with Management

component score not lower than “3” in th latest examination of the bank;

e. Not under Prompt Corrective Action (PCA) or under conditions subject to PCA;

f. No major supervisory concerns

g. Additional requirements for MBOs; At least 50% of total transactions generated are with microfinance

clients; It shall have a maximum on-site cash limit not exceeding P500,000

per day, commensurate to its level of banking activities; It shall have adequate physical facilities and security

arrangements as well as information and transaction support system;

It shall be managed by responsible officer with adequate experience or training in MF activities;

With manual of operations appropriate to its authorized activities.

Process in Establishing an MBOStage 1: Letter of Intent and Prequalification as per

Circular 694.

The applicant bank shall submit a letter of intent duly authorized by the Board of Directors, signed by the President or equivalent rank. The letter will be evaluated by the appropriate Supervision and Examinations Section (SES) Department based on safety and soundness considerations.

( See doc file for the Table of Product and Services for MBOs and OBOs)

Letter of Intent Template• Date ___________•  • Mr. Nestor Espenilla, Jr.• Deputy Governor• Bangko Sentral ng Pilipinas•  • Through: Central Application and Licensing Group• Supervision and Examination Sector•  • Dear Governor Espenilla:•  • We are respectfully expressing our interest to convert to Microbanking Offices (MBOs) the OBOs listed in Table 1, in accordance with

BSP Circ. 694 and Memorandum No. M-2010-040. •  • (If banks wants to retain OBOs that will do non-transactional functions, add this paragraph) We have also indicated in Table 2 the bank’s

existing OBOs that will retain their non-transactional functions.•  • We are also attaching copy of the previous Board approvals for the establishment of the OBOs.•  • We look forward to your favorable consideration of our request and permission to proceed to Stage 2 for the preparation of the Business

Plan.•  • Thank you very much.•  • Very truly yours,•  •  • Name• Designation•  •  •  • Attach.: Tables 1 & 2

Process in Establishing an MBOStage 2:

The bank is required to submit a business plan containing the strategic and operational details that will contain the results of the thinking process and analysis within the bank.

• ( See template for Strategic and Operational Plan for Micro-Banking Offices (MBOs)

 

Thank you!