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Providing an Enabling Regulatory Environment to Enhance Access to Finance for MSMEs .

Providing an Enabling Regulatory Environment to Enhance Access to Finance for MSMEs. A Joint Regional Symposium: "Best Practice Regulatory Principles Supporting MSME Access to Finance" 27-28 June 2011. Mary Rose A. Contreras Core IT Specialist Group Supervision and Examination Sector.

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Providing an Enabling Regulatory Environment to Enhance Access to Finance for MSMEs .

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  1. Providing an Enabling Regulatory Environment to Enhance Access to Finance for MSMEs. A Joint Regional Symposium: "Best Practice Regulatory Principles Supporting MSME Access to Finance" 27-28 June 2011 Mary Rose A. Contreras Core IT Specialist Group Supervision and Examination Sector

  2. 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

  3. Financial Landscape & Mobile Penetration 90M Population 26% of Filipinos have access to formal financial channels More than 75% of the population have mobile phones KBs, TBs, RBs and 9000 ATMS are located in cities and big towns 2B text messages/day 99% mobile phone coverage 610 out of 1635 municipalities do not have banks Philippine MAP

  4. CIRCULAR 649 – Guidelines on E-Money Issuance and Operations of E-Money Issuers e-Money Monetary value as represented by a claim on its issuer, that is – • Electronically stored in an instrument or device; • Issued against receipt of funds of an amount not lesser in value than the monetary value issued; • Accepted as a means of payment by persons other than the issuer; • Withdrawable in cash or cash equivalent; and • Issued in accordance with BSP Circular No. 649 dated 9 March 2009

  5. Electronic Money Total loaded cash value not to exceed P100 thousand/month BasicFeatures Redeemable at Face Value Not a Deposit Compliant with AMLA

  6. Prepaid Cash Cards Electronic Wallet Forms of E-Money

  7. Expanding Financial Access Through Innovative Technology Utility Bills Payment Remittance Purchase of Goods ACCREDITED REMCO OUTLET Banking Products - Deposits - Loans - Bills Payment Payment of Fare Payment of School Fees Person-to-Person Transfer Payment of Taxes and Licenses -11h -10h -09h -08h -07h -06h -05h -04h -03h -02h -01h 00h +01h +02h +03h +04h +05h +06h +07h +08h +09h +10h +11h

  8. E-money: Enhancing Access to Finance for MSMEs • Loan Release • Loan Payment • Deposit Build-up

  9. Loan Release Loan amount has been credited to XXXXXXXXXX0005. Thank you for using this service 1Upon 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

  10. Loan Payment Amount of P100 has been transferred to/from XXXXXXXXXX03452. Thank you for using this service 1Client 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

  11. Deposit build-up Amount of P100 has been transferred to/from XXXXXXXXXX03452. Thank you for using this service 1Client 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.

  12. Reduced travel time & cost • Reduced risk • Convenient • Time saving • Availability Benefits to Users

  13. Creating an Enabling Environment with Proportionate Regulations Allow non-banks to offer e-money Remittance Agents allowed to perform Cash-In/Cash-Out Simplification of requirements for KYC Formalized guidelines on issuance of electronic money Allowed microfinance-oriented OBO limited transactional banking activities

  14. 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

  15. 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.

  16. TASKS AHEAD Success breeds new challenges and risks. • Steady advocacy for responsible finance • Price transparency Consumer Protection Close monitoring of market practices and developments Financial literacy promotion

  17. End of Presentation. Website: www.bsp.gov.ph E-mail address: mrcontreras@bsp.gov.ph

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