“What we really care about, or what at least ought to care, is not our individual welfare as separate beings but the triumph of causes which transcend our personality”

Alfred Cyril Ewing

Predecessors and lawmakers were imbued with a vision when RA 720 or the Rural Banking Act was enacted in 1952. They envisioned rural banks and cooperatives like a phoenix, to spur growth from the ashes of war. They agreed to the qualification that the Board of Directors, above all, possesses a missionary outlook and devotion to their work. Perhaps to emulate the success of the Obras Pias of the past. It was a dream anyway – a noble and a needed one at a time. Dreamers were not lacking. There were 18 rural banks, within the year of the enactment of RA 720. For the first full year, the total resources amounted to P2.4 million. It was reported that deposits amounted to P2,000 and an aggregate loss of P46,033 at the end of the year. Nevertheless, rural banks grew at a snail pace, hardly making a dent in the national economy in terms of monies and improving the lives of the majority in the rural areas. But the vision remains.

Fifty years hence, as of end-June 2002, the combined resources of the rural and cooperative banking system amount to P76.7 billion with rural banks dominating the industry with a combined share of 93.5 percent. Deposit liabilities remain to be the main source of funds for lending and investment operations. From a diminutive number of 18 rural banks in 1953, there are now 1804 consisting of 727 head offices and 1,077 branches located all over the country. Rural Banks have grown indeed, but not as envisioned. Reality checks that rural banks including cooperatives are but 2.2% of the total banking system. What remains significant is that when the 2.2% is translated in real terms – it means 70% of the total clients served by the entire banking industry! Rural Banks serve the most number of people – of which the majority is poor. Small but numerous transactions. Tedious but matters much to the lives of the rural folks. The significance is that given the opportunity – that 70% clientele may seem or deemed as a force from where growth should spur, thereby developing the economies.

And the rural bank’s vision is to see that 70% clientele as most productive sector of the society. It will not happen overnight. But as the saying goes, there is a way if there is a will – and that is laying-down, continuing and adding on to what pioneering rural bankers have started in the past. It means holding on to that vision and doing what must be done. Plans and activities are not wanting.

Foremost is the most needed amendment of the present R.A. 7353 or the Rural Banking Act to resolve the issues, plug the loopholes, decrease financial cost of borrowers and re-direct the flow of funds to the countryside. The amendment is now being deliberated as HB 5115, introduced by Reps. Felix R. Alfelor, Jr. and Herminio G. Teves, in the Lower House and as SB 2355 by Sen. Ramon B. Magsaysay in the Upper House.

Another is linkage with private and government entitled to broaden the financial base of the rural banks and to better serve the clientele – to serve themselves. Much like the story of providing the needy with fishing implements rather than fish. A partnership with Land Bank of the Philippines will reinforce the role of rural banks as intermediaries of change in the countryside. It is a mutual cooperation envisioned to cover liquidity and fund management services, shared network, auditing and accounting services, financial advisory services and training institute among others. In the same breathe, partnership with Postal Bank and Ciphercom, with Philippine Veterans Bank, with Worldlink, private and or government businesses and subsidiaries of international corporations, will usher the rural banks into the world of e-commerce and OFW remittances. Soon the rural banks will be able to efficiently serve not only OFWs and Filipino professionals in various countries abroad who will be able to send remittances to their loved ones in the remotest barangay in a matter of minutes but also the increasing number of local entrepreneurs.

Once in a dialogue with the rural and thrift bankers, President Gloria Macapagal-Arroyo said that for development to happen, there is a need to boost domestic demands and not to be dependent on exports, hence her administration will give priority to SMEs. And usually, SMEs’ recourse for financial requirements are rural banks. This is where the government and the rural banks become allies for real countryside development.

In the final analysis, what really matters is the vision that guides the present actions to wards a better future.

News

Editorials

Views