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BSP lifts service fee on banks with OFW money for 6 months

MANILA, Philippines — The Bangko Sentral ng Pilipinas approved the lifting for six months of the service fee charged on banks that facilitate the sending of remittances from Filipino migrants using the BSP’s Philpass system.

BSP Governor Amando Tetangco Jr. said the move will reduce the cost of sending or receiving remittances, something that is consistent with the goal of encouraging the sending of remittances through formal channels.

Philpass is the electronic clearing system for inter-bank transactions, such as check payments, and transactions between banks and the BSP.

In December 2009, the central bank and industry members signed an agreement allowing the use of the same system to facilitate the sending of remittances starting 2010.

Prior to the decision of the BSP to temporarily waive the service fee, each transaction involving the sending of remittances using Philpass was charged a fixed amount of P50. The decision to waive the fee for six months was made during the meeting of the BSP’s Monetary Board last week.

“The Monetary Board has approved the waiver for six months. This will help enable banks to lower their remittances fees,” BSP Governor Amando Tetangco Jr. said over the weekend.

Under the agreement between the BSP and industry members, a bank that receives a remittance from abroad shall use the central bank’s Philpass system to electronically transfer the money to another bank, which is closer to where the intended beneficiary resides.

Prior to the signing of the agreement, many banks transfer money to another bank through courier service, which Tetangco said has been costlier and has required more time for settlement than electronic means.

The use of the Philpass system has also made the sending or receiving of remittances much less costly. Previously, banks were paying a fee ranging from P100 to P550, depending on the amount of remittance, to facilitate the sending of remittances.

The central bank chief said that with lower cost, even more Filipinos would be encouraged to use the banking system rather than informal channels to send remittances to their families and other intended beneficiaries

The BSP estimates that three to four percent of total remittances annually are sent through informal channels, much lower than the 30 percent estimated at least five years ago.

“With this project, the percentage share of remittances sent through informal channels could go down even further,” Tetangco said.

He said the central bank pushed for this project to help OFW families, who have been burdened by still high remittance cost.

Remittances are considered a big boost to the Philippine economy, helping it avoid a recession last year. BSP estimates said remittances, which stood at $17.3 billion in 2009, were equivalent to 10 percent of the country’s gross domestic product.

By Michelle Remo
Philippine Daily Inquirer


Filed under: Bank Services, Kwentong OFW, OFW Corner,

8 million Filipinos now using mobile banking — BSP

Over eight million Filipinos are now using mobile banking services in the country, which the central bank says would boost more efficient financial services in rural and other hard-to-reach areas at relatively lower costs.

BSP Deputy Governor Nestor Espenilla Jr. said there are now 49 rural banks offering mobile banking from none before 2005.

These eight million users use the electronic money (e-money) services of major telecommunications companies Smart Communications and Globe Telecom, which offer Smart Money and G-Cash, respectively, BSP said.

These allow mobile subscribers, particularly those without bank accounts, to deposit, transfer, and withdraw money from one e-money account to another in the telecom company’s business centers nationwide.

Espenilla noted that the Philippines has been recognized by international organizations for its microfinance initiatives and is considered as the leading pioneer in mobile banking solutions for the poor.

Some banks even lowered interest rates on microfinance loans for clients who use text-a-payment platform by 50 basis points on monthly rates, Espenilla added.

“Technology extends outreach of microfinance and banking services to a large number of bankable but un-banked especially those in rural and hard to reach areas at lower costs and higher efficiency,” he said.

He explained that the mobile phone industry in the Philippines serves all income groups especially low income groups and more than 75 percent of the population have mobile phones.

Electronic transactions, which involve the payment of purchased goods and services, could also be used for remittances from Filipinos abroad, Espenilla noted.

“The amount of e-money transactions is already huge, and we expect it to grow further,” the BSP official added.

The BSP said it has ordered firms offering e-money services to register with the central bank as an electronic money issuer (EMI).

These could include banks, non-bank financial institutions, and money transfer agents. Those qualified as EMI include stock corporations with a minimum paid-up capital of P100 million.

E-money is also not considered a bank deposit and is not covered by the deposit insurance provided by the Philippine Deposit Insurance Corp. (PDIC).

The guidelines also limit the maximum amount that can be loaded to any e-money instrument to P100,000 a month. — OMG, GMANews.TV



Filed under: Bank Services, Business, Mobile Technology, Sorsogon News Updates

A Christmas gift for OFWs

There are no words to describe the heroism and sacrifice of our overseas Filipino workers. Feeling homesick and lonely, they still make sure to send extra money back home, so their families could experience an extra special Christmas celebration even without them.

This selfless practice has resulted in a notable surge in remittances during the last months of the year, particularly in December. Even with the global financial crisis, the Bangko Sentral ng Pilipinas said remittances hit $1.4 billion in December alone last year, an increase of 0.8 percent over the same period in 2007.

BSP Deputy Governor Diwa Guinigundo said that remittances continue to account for around 10 percent of the country’s Gross Domestic Product and equivalent to 10 times the country’s foreign direct investments.

According to Guinigundo, the realization of the Philippine economy’s long-term growth potential also depends on how remittances can be harnessed as an important tool for sustainable development.

In an effort to enhance the remittance environment for migrant Filipino workers, BSP Governor Amando M. Tetangco Jr. last week signed an agreement with the Association of Bank Remittance Officers, Inc.. (ABROI), represented by Carmelita Araneta, Bankers Association of the Philippines (BAP), represented by Aurelio Montinola III, the Chamber of Thrift Banks (CTB), represented by Pascual Garcia III, and the Rural Bankers Association of the Philippines, represented by Joseph Omar Andaya.

The agreement will enable the groups’ members to use the Bangko Sentral’s Philippine Payments and Settlements System (PhilPass) — a system that enables banks and other non-banks with quasi-banking functions (NBQBs) to settle their payments in real time — for interbank remittance transfers.

According to Deputy Governor Armando L. Suratos Jr., who manages the PhilPass, the use of the PhilPass’ technology will not only allow faster and safer transmission of remittances from an OFW to his beneficiaries; it will also significantly reduce the fees they have to pay for the transaction.

Under the present setup, OFWs have to pay anywhere from P100 to P500 when the bank where they deposited their remittance is different from the bank of their beneficiaries back home. This bank would have to hire the services of a courier to deliver the funds to the other bank.

Banks could also use the Electronic Peso Clearing System (EPCS) of the Philippine Clearing House Corporation (PCHC), which provides a check clearing system for member banks. However, OFWs have to pay additional back-end processing fees and risk delays in transactions with this method.

BSP Governor Amando Tetangco Jr. said that given these delays and the disturbing incidents of theft and robbery involving a number of couriers tasked to deposit remittances, PhilPass is seen as a safer, faster, and more efficient option for migrant Filipino workers.

With PhilPass, participating banks can charge a significantly lower standard back-end processing fee of only P50 per remittance transaction.

The use of BSP’s payment and settlement system will also allow for a feedback interbank mechanism that will ensure the real time transmission of the remittance.

Tetangco said the systems integration of ABROI member banks with the BSP’s PhilPass will be completed before the end of the year, and is expected to be operational by late February or March next year.

BSP estimates that remittance transactions average 66 million per year, of which transmissions through “credit to other banks” account for eight percent or an average of 5,000 transactions daily.

Tetangco said this will result in savings of at least P75 million in annual remittance fees for migrant Filipinos — a very significant “consuelo” and Christmas gift for our modern-day heroes.

* * *

Last Thursday, BSPers witnessed the annual traditional lighting ceremony at the Bangko Sentral ng Pilipinas. Against the backdrop of the recent global financial turmoil, the BSP’s yearly tradition means a lot.

I look at the BSP’s Christmas lights as a symbol of hope to the Filipino people, especially during this special time of the year when optimism should abound. That despite the darkness brought about by the global crisis, the Philippine economy stays strong and resilient, and that there is indeed reason to hope amid the many challenges we face as a people.

Congratulations to BSP Managing Director Manuel Torres and his staff who put together the impressive displays that adorn the facades of the BSP fronting Roxas Boulevard and Mabini Street, as well as the BSP lobby. Ninety percent of the materials used were recycled from glass diffusers!

Note: You may e-mail us at totingbunye2000.

A Christmas gift for ofws
By : Manila Bulletin

Filed under: Bank Services, Sorsogon News Updates,

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