Market expansion through MBOPresentation Transcript
Market Expansion through Microfinance-Banking Offices (MBOs) September 12-13, 2011 RBAP 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 Steps
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 Establishment 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; The bank shall ensure the timely accounting and proper recording of financial transactions and observe adequate internal control procedures. 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 Establishment d. 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 MBO Stage 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,
Attach.: Tables 1 & 2
Process in Establishing an MBO Stage 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)