BSP approves no-frills basic deposit account.
By Lee C. Chipongian
The Bangko Sentral ng Pilipinas (BSP) has approved the no-frills basic deposit account with no maintaining and dormancy fees, and banks that will offer it will have zero reserves as an incentive.
BSP Deputy Governor Chuchi G. Fonacier said the Monetary Board, the BSP's policy-making arm, has given the nod to the new guidelines last Thursday, January 11.
Fonacier said the basic deposit account will have no maintaining balance and no dormancy fees. "You can even open an account (with balance of) below P100," she added. At the moment, there are some banks that allow non-interest earning savings account with just P100 maintaining balance, and as low as P1,000 for current or checking accounts.
The BSP will however impose reserve ratio requirements when the account balance exceeds P50,000. When it is more than P50,000, the host bank will convert a basic deposit account to a regular account with reserves.
A reserves ratio of 20 percent is charged to all banks, it is the percentage of bank deposits and deposit substitute liabilities that banks maintain or deposited with the central bank.
For basic deposit accounts, the BSP has removed the reserves requirement since banks will only earn minimally from basic banking products.
Fonacier said basic deposit accounts will also enjoy reduced KYC or "Know Your Customer" requirements but the moment the balance increases above the threshold, they will automatically be shifted to an enhanced KYC scrutiny.
The BSP said last week that its policy framework on basic deposit account will remove the "usual barriers" in account opening including an opening amount and maintaining balance considered too high by most new depositors, dormancy charges, and lack of identity documents.
As of end-June 2017, the banking industry has 44 million total depositors in current, time and savings accounts.
About 39.48 million are savings account holders, of which 33.44 million are account balances of P5,000 and below, 3.28 million maintain P5,000 to P10,000 balances, 2.19 million for the P10,000 to P15,000 deposits, and 3.77 million for deposits averaging P15,000 to P40,000. The total accounts have an outstanding balance of P11 trillion.
The BSP said that between 2011 and 2016, the number of depositors and accounts are growing by a yearly average of six percent and four percent, respectively.
The approval of the basic deposit account rules follow the approval of the "branch-lite units" of banks which will have limited banking activities but could provide a wide range of products and services suited for servicing the needs of the market, except for sophisticated clients "with aggressive risk tolerance."
The BSP's policy initiative for the rationalization of banking offices and the opening of simplified deposit accounts should further develop a more inclusive banking system.