Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, and the Philippine Deposit Insurance Corp (PDIC), the national deposit insurer, have created the Strengthening Program for Rural Banks (SPRB), which will raise PHP 5 billion (USD 108 million) in funding to encourage mergers and consolidations of ailing banks in the rural banking sector.  In the Philippines, rural banks are the primary source of microloans in the countryside. SPRB was created in response to the spate of failures and closures experienced by the rural banking sector including, in the first quarter of 2009 alone, the closure of 19 rural banks by the BSP that were then placed under the receivership of the PDIC.  PDIC president Jose Nograles states that an estimated fifteen percent of rural banks are thought to be weak or distressed. BSP Governor Amando Tetangco Jr. notes that of the 179 rural banks that were placed under the BSP’s “prompt and corrective action” program, 103 rural banks were found to be undercapitalized.  Under the SPRB scheme, investors will be able to tap these funds in order to acquire ailing rural banks and inject fresh capital into these banks.

About Bangko Sentral ng Pilipinas (BSP):

Established in July 1993, Bangko Sentral ng Pilipinas (BSP) is the central bank of the Republic of the Philippines. BSP has three regional offices and eighteen branch offices that perform cash operations and administration. BSP participates in advocacy programs concerning microfinance, financial education and consumer protection. BSP website: http://www.bsp.gov.ph/index.asp
 

About Philippine Deposit Insurance Corporation (PDIC):

Established in 1963, the Philippine Deposit Insurance Corporation is the nation’s principal deposit insurer.  PDIC also serves to regulate the banking sector and, specifically, acts as the liquidator and receiver of insolvent banks. PDIC website: http://www.pdic.gov.ph/index.php?nid1=1

 

Bibliography:

BSP: http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bangko+Sentral+ng+Pilipinas+%28BSP%29%2C

PDIC: http://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Philippine+Deposit+Insurance+Corporation+%28PDIC%29

 

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