The Bangko Sentral ng Pilipinas (BSP) has issued new rules setting capital and operational requirements for thrift, rural and cooperative banks transitioning to business models similar to digital banks.
Under Circular No. 1240, issued Sept. 21, existing thrift banks, rural banks and cooperative banks that the BSP determines are operating under a digital bank-like model must maintain a minimum capital of Php 1 billion.
Banks covered by the rule will have six months from receipt of the BSP notice to comply.
The same Php 1-billion minimum capital requirement will apply when an acquisition is intended to transform a thrift, rural or cooperative bank into a technology-driven business model.
These banks will also be required to comply with prudential standards applicable to digital banks.
The BSP may impose additional measures, including enhanced supervisory reporting, limits on certain activities or new digital products and services, and stronger risk management and internal control systems.
The requirements will apply to banks whose operations have become similar to those of digital banks or whose risk management systems and capital levels are no longer aligned with their official business models and risk profiles.
They will also cover institutions that rely heavily on digital platforms and post significant growth in loan or deposit balances.
“The requirements aim to ensure that these banks can adequately manage risks arising from the nature, scale, complexity, and risk profile of their operations,” the BSP said.
The circular also allows the BSP to issue additional digital bank licenses, including through the conversion of existing thrift, rural and cooperative banks, subject to the prevailing licensing framework.
Applications for conversion will be reviewed based on readiness to operate as a digital bank, governance, systems, value proposition, business model and available resources.
The BSP said a digital banking license would allow converted institutions to market their services to a broader customer base, including clients outside their traditional geographic areas.
There are currently seven licensed digital banks in the Philippines.
