Based on the BSP, 86% of the population does not have a bank account. BSP cited several reasons why Filipino does not have a bank account: No need for account, bank is too far, can't manage the account, service charge is too high.
The most common collateral for loans, based on the same survey, includes ATM card (40%), land title ( 23%), appliances (12%), car (8%) and crops (6%).
A typical Php 10,000 loan from the locally known as "sangla ATM" or payday loans, will require a payback of $12,000 in 4 months time - which is 20% interest.
It is indeed a lucrative business that attracts more and more people with money to lend. Two men operating their business in this model said that the money they should have earned in a typical work in a company for eight years, they just earn the same amount in less than a year.
Financial Inclusion
The real challenge, according to Rosabel Guerrero, the director of Department of Economic Statistics at Bangko Sentral ng Pilipinas (BSP) is how the government can include millions of Filipinos in formal banking system in the country.
Source: ABS-CBN
Opinion
Since getting a bank loan requires a lot paper works which an ordinary Filipino doesn't even posses. Some of the ridiculous bank requirement to open an account is atleast two ID with photo. Most of the citizen just have one ID in their purse - that is Voter's ID of they are voting.
So where the hell are they going to get another ID with photo?
An ID issued by government should be sufficient to prove your identity.
Plus there are minimum amount which a person has to maintain in order for him.her to open an account as you can see on the table below.
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| Peso savings account in BDO |
Once you did not met the required Monthly Average Daily Balance (MADB) - which is very high for some citizen since those balance will stay in the bank and cannot be withdrawn unless you have a deposit that will make the average equal to atleast Php 2,000. or else a fee of Php 300 will be deducted automatically to your account. in just about a span of 6 months, all your Php 2,000 will be gone if you left it in the bank untouched. So why do you have to save in the bank in the first place?
There is also this MADB minimum deposit to earn interest. For the said Prime Savers - it amounts to Php 5,000. You need to reach that number before an interest can be paid into your account.
The simple question for ordinary people is: If they have Php 4,000 in their pocket - are they going to open a savings account knowing that it is a hassle to do so and there is no incentive of doing so since the money won't earn interest?
The only solution to the problem I think is to remove all those ridiculous fee on savings and reduce the "MDAB to earn interest" be the same as the MDAB.
This should be the line that will determine whether your money is earning or not. If it falls below this line, you cannot earn interest - but will not give you penalty in keeping the account active to save you some hassle of closing the account if it falls below, and then opening another account once they have enough savings to do so. It's a hassle to do that, and most of the time - they won't even come back to open another.
ATM loaners can be combated by the bank by offering the ATM holders of that particular bank the same service that the "Sangla ATM" operator is offering - only that they have the advantage since the payments passes thru their systems and networks, so they can easily monitor the funds (sweldo) and thus have an upper hand here, combined with a lower interest rate for the loans.
To put it simply... make the bank requirements SIMPLE and making loans to bank SIMPLE.
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