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Providing an Enabling Regulatory Environment to Enhance Access to
Finance for MSMEs.
A Joint Regional Symposium: "Best Practice Regulatory Principles A Joint Regional Symposium: "Best Practice Regulatory Principles Supporting MSME Access to Finance" 27-28 June 2011Supporting MSME Access to Finance" 27-28 June 2011
Mary Rose A. Contreras Core IT Specialist Group
Supervision and Examination Sector
AGENDA
Current Financial Landscape and Mobile Penetration
E-Money and Business Models
E-money: Enhancing MSMEs access to finance
Creating an Enabling Environment with Proportionate Regulations
Tasks Ahead
99% mobile phone coverage
KBs, TBs, RBs and 9000 ATMS are located in cities and big towns
26% of Filipinos have access to formal financial channels
More than 75% of the population have mobile phones
610 out of 1635 municipalitiesdo not have banks
2B text messages/day
90M Population
Financial Landscape & Mobile Penetration
CIRCULAR 649 – Guidelines on E-Money Issuance and Operations of E-Money Issuers
Monetary value Monetary value as represented by a claim on its issuer, that is –
a. Electronically stored in an instrument or device;
b. Issued against receipt of funds of an amount not lesser in value than the monetary value issued;
c. Accepted as a means of payment by persons other than the issuer;
d. Withdrawable in cash or cash equivalent; and
e. Issued in accordance with BSP Circular No. 649 dated 9 March 2009
Redeemable at Face Redeemable at Face ValueValue
NotNot a Deposit a Deposit
Total loaded cash value not to Total loaded cash value not to exceed exceed P100 thousand/monthP100 thousand/month
Compliant with Compliant with AMLAAMLA
Electronic MoneyElectronic Money
BasicBasicFeaturesFeatures
Forms of E-MoneyForms of E-Money
Prepaid Cash CardsPrepaid Cash Cards
Electronic WalletElectronic Wallet
ACCREDITED REMCO
OUTLET
Remittance
-11h -10h -09h -08h -07h -06h -05h -04h -03h -02h -01h00h
+01h +02h +03h +04h +05h +06h +07h +08h +09h +10h+11h
Expanding Financial Access Through Innovative Technology
Purchase of Goods
Payment of Fare
Banking Products- Deposits- Loans- Bills Payment
Utility Bills Payment
Payment of School Fees
Payment of Taxes and
Licenses
Person-to-Person
Transfer
E-money: Enhancing Access to Finance for MSMEs
• Loan Release• Loan Payment• Deposit Build-up
Loan Release
1 Upon loan application, client already indicates his e-money/e-wallet account number
2 Upon loan release, client shall receive an SMS notification on the credited loan proceeds to e-wallet
3 Client can go to any Cash Out center to convert electronic money to actual cash
Loan amount has been credited to
XXXXXXXXXX0005. Thank you for using this
service
Loan Payment
1 Client chooses loan payment from menu, enters the amount to be paid, enters his PIN to authorize the transaction
2 Client and the lending bank shall receive an SMS notification upon fund transfer from client’s e-wallet to lending bank’s e-wallet
3 Lending bank records the loan payment made in step 2
Amount of P100 has been transferred
to/from XXXXXXXXXX03452.
Thank you for using this service
Deposit build-up
1 Client chooses text-a-deposit from menu, enters the amount, enters his PIN to authorize the transfer of e-money value from his wallet to bank’s wallet
2 Client and the depositary bank shall receive an SMS notification upon fund transfer from client’s e-wallet to depositary bank’s e-wallet
3 Depositary bank records the amount to the client’s deposit account.
Amount of P100 has been transferred
to/from XXXXXXXXXX03452.
Thank you for using this service
Benefits to UsersBenefits to Users
Reduced travel time & costReduced travel time & cost
Reduced riskReduced risk
ConvenientConvenient
AvailabilityAvailability
Time savingTime saving
1.1. Allow non-banks to offer e-moneyAllow non-banks to offer e-money2.2. Remittance Agents allowed to perform Remittance Agents allowed to perform
Cash-In/Cash-OutCash-In/Cash-Out3.3. Simplification of requirements for KYCSimplification of requirements for KYC4.4. Formalized guidelines on issuance of Formalized guidelines on issuance of
electronic moneyelectronic money5.5. Allowed microfinance-oriented OBO Allowed microfinance-oriented OBO
limited transactional banking activitieslimited transactional banking activities
Creating an Enabling Environment with Creating an Enabling Environment with Proportionate RegulationsProportionate Regulations
Latest BSP Regulatory Initiatives• Circular 649 (January 2009)- Regulating the issuance
of electronic money – Definition of e-money and EMIs– EMI as the supervised entity of Bangko Sentral– Qualification standards of both bank/ non bank
issuers such as Capital, Risk Management and Liquidity Cover
– Compliance to AML rules– Consumer protection standards including Adequate
Disclosure
Latest BSP Regulatory Initiatives• Circular 704 (December 2010)- Electronic Money Network
Service Providers (EMNSP)– Smaller banks aiming to be EMIs can engage services of EMNSP – Stressed Due Diligence and Continuing Operational Review
• Circular No. 706 (January 2011) – Updated AML rules and regulations– Reduced due diligence for low risk clients– Reliance on third-party KYC
• Circular 694 (October 2010)- Microfinance-oriented other banking offices (MF-OBO)– MF-OBO can perform limited transactional banking
activities: micro-deposits, release micro-loans, etc.
TASKS AHEADTASKS AHEAD
Success breeds new challenges and risks.
Steady advocacy for responsible financePrice transparency Consumer Protection
Close monitoring of market practices and developments
Financial literacy promotion
