THE rural banking industry in Negros Occidental remains stable amid the recent closure of two rural banks in the province, and depositors should not lose confidence in these financial institutions, a local official of the Bangko Sentral ng Pilipinas said.
BSP-Bacolod Branch Head Job Nepomuceno said the recent closures of the New Rural Bank of Binalbagan and Community Rural Bank of Magallon, all in southern part of Negros Occidental, are “isolated” cases.
Nepomuceno said the two banks are not representing the whole industry thus, their closure does not mean that all local rural banks are encountering difficulties and up for closure also.
The New Rural Bank of Binalbagan and Community Rural Bank of Magallon were ordered closed by the BSP’s Monetary Board last June and November, respectively, due to financial liabilities.
“We still have a stable rural banking industry in the country, including Negros Occidental,” Nepomuceno said, adding that there are still well-managed banks, and some even have branches in other provinces.
Liquidity and solvency problems are two main causes of bank closure.
When the bank lacks cash, wherein depositors cannot immediately withdraw their intended amount, BSP said it may fall under liquidity problem.
Solvency problem, meanwhile, happens when the bank’s financial liabilities are more than its assets.
This is evident when the financial institutions are not capable of paying, for example, supplier of materials within the normal course of business or non-payment of employees’ salary.
Nepomuceno said that for depositors to ensure their finances, there are several parameters which the agency is urging them to observe.
“They have to know who is running the bank and ask for financial statements which are usually being posted at the establishment,” he said.
Asked if there are impending closures of rural banks in the province, Nepomuceno said it is not within their jurisdiction, but under the supervision and examination sector of BSP Central Office.
