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BSP limits Philippine digital banks to six

The Bangko Sentral ng Pilipinas (BSP) on Monday said it will limit the country’s digital bank licenses to six, after other applicants failed to submit the necessary documents to secure the last spot.

During a virtual  forum organized by the Financial Executives Institute of the Philippines (FINEX), BSP Governor Benjamin Diokno said the central bank decided to cap the digital banks at six to closely monitor the industry moving forward.

“We approved six digital banks and it will remain six because the seventh slot— which was supposed to be completed among the nine additional applicants— it turned out that the nine additional applicants failed to submit a complete documentation for the request, so we will keep it at six,” he said.

The six digital banks that secured BSP approval to operate in the country are the GOtyme of Robinsons Bank Corp., Maya Bank of PayMaya, Overseas Filipino Bank (OFBank), Tonik Bank of Singapore, UNObank of Singapore, and UnionDigital of the Union Bank of the Philippines.

Diokno noted that digital banks are only required to have one headquarters and do not need to have branches, making their operating costs lower and enabling them to offer higher interest rates.

Diokno earlier said the Monetary Board decided to cap the country’s digital banks to seven for the next three years, with the application window ending in August.

In November 2020, the central bank approved the recognition of digital banks as a new bank category separate and distinct from other bank classifications .

Digital banks are defined as banks that offer financial products and services that are processed end-to-end through a digital platform and/or electronic channels with no physical branches.

To qualify, banks must meet the minimum capitalization of P1 billion, and will have to follow all the fiduciary rules imposed on other bank categories.—AOL, GMA News