TO help the government raise new money needed to address Covid-19 pandemic, a lawmaker on Sunday said the national government should consider an auction system for lucrative digital banking licenses.
House Assistant Majority Leader and Cebu Rep. Eduardo R. Gullas Sr. posed his recommendation after the Bangko Sentral ng Pilipinas (BSP) decided to stop accepting applications for new digital bank licenses effective September 1 and to close the window for three years.
“An auction format will allocate the digital banking licenses to private parties that value them the most and provide government additional non-tax income at the same time,” Gullas said.
“There are still many parties out there that clearly want to venture into digital banking; so an auction of additional licenses might be viable,” Gullas said.
The BSP has said the monetary board believes the closure of the application will help them maintain a stable and competitive environment for these new digital banks.
According to BSP Governor Benjamin E. Diokno, the closure of the application window will allow the BSP to monitor the performance and impact of digital banks on the banking system and their contribution to the financial inclusion agenda.
Citing the Department of Finance, Gullas said the BSP is a huge source of non-tax government revenue, remitting a total of P40.53 billion in cash dividends to the national treasury in 2020 alone.
“There’s no question that a digital banking license can be gainful,” Gullas said noting that 51.2 million adult Filipinos, or 72 percent of the country’s adult population, remain unbanked.
“We expect more Filipinos to open digital banking accounts in light of the dramatic shift to online transactions induced by the pandemic.”
Under BSP guidelines, a digital bank “offers financial products and services that are processed end-to-end through a digital platform and/or electronic channels with no physical branch/sub-branch or branch-lite unit offering financial products and services.”
Parties that wish to operate a digital bank pay application fee of only P250,000 plus a license fee of P12.5 million.
In contrast, parties applying for a brick-and-mortar universal bank pay an application fee of P500,000 and a license fee of P25 million.
The BSP has so far issued digital banking licenses to five entities: UNObank, an affiliate of Singapore’s DigibankASIA Pte. Ltd.; TONIK Digital Bank Inc., a subsidiary of Singapore’s TONIK Financial Pte. Ltd.; Union Digital Bank, a firm controlled by Union Bank of the Philippines; Overseas Filipino Bank, a unit of the state-owned Land Bank of the Philippines; and GOtyme, a joint venture between the Gokongwei Group and Singapore’s TymeBank.
Besides the five, the BSP said it is currently processing the digital banking applications of two other unnamed aspirants.
PayMaya Philippines Inc. earlier said it intends to launch a digital bank after its parent, Voyager Innovations Inc., raised $167 million for the purpose.
Publicly listed AbaCore Capital Holdings Inc. also previously disclosed that its unit, Philstar Development Bank, is forming a joint venture with SquidPay Technology Inc. to go into digital banking.
In the past, Philippine National Bank and Rizal Commercial Banking Corp. likewise bared separate plans to apply for a digital banking license.