The BSP initiatives to improve the Overseas Filipinos’ (OFs) remittance environment are geared towards the following:
1. Enhancing transparency and promoting competition in the remittance market. Studies on remittances underscore the importance of healthy competition among the remittance players to bring down transaction costs. To drive down remittance charges, remitters and beneficiaries should be fully aware of the costs and benefits of the different products and services available in the market. The BSP issued Circular No. 534 dated 26 June 2006, requiring banks and non-bank financial institutions to post remittance charges, classification of costs, and other relevant information for the benefit of remitters and beneficiaries. To facilitate access to bank websites, the BSP will serve as a portal* to all relevant pages of the banks on remittance services and products, locations of branches/centers, as well as their corresponding service fees.
Access to financial services
2. Improving access to financial services. Toward promoting efficient and speedy transfer of funds to beneficiaries in remote areas of the country, the BSP has:
a) granted foreign currency deposit unit (FCDU) license to rural banks/cooperative banks to encourage the flow of foreign exchange into the banking system and provide OFs with an option to maintain foreign currency deposits (FCD) instead of immediately exchanging their remittance proceeds into pesos through the issuance of Circular No. 522 on 23 March 2006;
b) facilitated interconnection of major ATM networks to provide safer and convenient banking and to reduce transaction cost or service fees for all ATM-related transactions of over 10 million ATM cardholders, including OFs and their beneficiaries;
c) approved alternative modes of remittances, e.g., Smart Padala, G-Cash and stored value cards to achieve lower transaction cost and faster delivery time for the remitters and the beneficiaries;
d) issued Circular Nos. 564 (3 April 2007) and 608 (20 May 2008) to standardize identification requirements of banks to customers while ensuring compliance with the Anti-Money Laundering Act. The BSP issued Circular No. 657 on 16 June 2009 to further amend Circular No. 564 allowing the use of foreign-issued passports as valid identification of OFs when financially transacting in the Philippines; and
e) signed a Memorandum of Agreement (MOA) with participating banks to set up a local clearinghouse for credit-to-other-banks mode of remittances to eliminate the use of couriers in delivering remittances to beneficiaries reducing charges by as much as 90-96%. The MOA also standardizes and reduces back-end processing fees presently ranging at P100-P550 to P50 per transaction.
BSP has encouraged commercial banks
3. Encouraging OFs and their families to increase savings and investment. The BSP has encouraged commercial banks to offer OFs specialized investment products and services, e.g., insurance, pension and real estate, with direct payment schemes to ensure the security and added convenience of beneficiaries. The BSP has also approved the proposals of DBP and LBP to launch their hedging program and Long-Term Negotiable Certificates of Deposit for OFWs, respectively. Microfinance has also been promoted by the BSP as a flagship program for poverty alleviation to help channel remittances sent to rural households to investment in small scale businesses.
4. Promoting financial learning among OFs and their beneficiaries. The BSP continues to undertake its advocacy through financial learning campaigns (or FLCs) that aim to promote a culture of savings among OFs and their families and encourage the channeling of these savings into productive investments in financial instruments and business ventures. The FLCs are conducted using lectures and multimedia presentations focusing on topics such as the importance of remittances, financial planning, rewards and risks associated with various financial instruments, and ways to protect remittances and savings. Through the FLC, the BSP aims to encourage the productive uses of remittances, not only for consumption or spending for basic needs, but also for savings in different forms of financial instruments and/or investments such as in micro, small- and medium-sized enterprises.
In addition to the financial learning activities, OFs and their families can make use of the Financial Planner developed by the International Organization for Migration (IOM) and ATIKHA (a development-oriented Philippine NGO) to guide them in managing their finances. The financial planner provides a simple and practical guide for migrant workers and their families to manage their budget and remittances within a framework of wise-spending, savings and investment. It includes tools on the budgeting process, planning for retirement, savings and entrepreneurial undertakings, cash flows monitoring, property acquisition, investment portfolios, and overall financial standing.