1. Providing an Enabling Regulatory Environment to Enhance Access to Finance for MSMEs. A Joint Regional Symposium: "Best Practice Regulatory Principles Supporting MSME Access to Finance" 27-28 June 2011 Mary Rose A. Contreras Core IT Specialist Group Supervision and Examination Sector

2. AGENDA Current Financial Landscape and Mobile Penetration E-Money and Business Models E-money: Enhancing MSMEs access to finance Creating an Enabling Environment with Proportionate Regulations Tasks Ahead

3. 99% mobile phone coverage KBs, TBs, RBs and 9000 ATMS are located in cities and big towns 26% of Filipinos have access to formal financial channels More than 75% of the population have mobile phones 610 out of 1635 municipalities do not have banks 2B text messages/day 90M Population Financial Landscape & Mobile Penetration

4. CIRCULAR 649 – Guidelines on E-Money Issuance and Operations of E-Money Issuers Monetary value Monetary value as represented by a claim on its issuer, that is – a.Electronically stored in an instrument or device; b.Issued against receipt of funds of an amount not lesser in value than the monetary value issued; c.Accepted as a means of payment by persons other than the issuer; d.Withdrawable in cash or cash equivalent; and e.Issued in accordance with BSP Circular No. 649 dated 9 March 2009

5. Redeemable at Face Value Not a Deposit Total loaded cash value not to exceed P100 thousand/month Compliant with AMLA Electronic Money Basic Features

6. Forms of E-Money Prepaid Cash Cards Electronic Wallet

7. ACCREDITE D REMCO OUTLET Remittance -11h-10h-09h-08h-07h-06h-05h-04h-03h-02h- 01h00h +01h+02h+03h+04h+05h+06h+07h+08h+09h+10h+ 11h Expanding Financial Access Through Innovative Technology Purchase of Goods Payment of Fare Banking Products - Deposits - Loans - Bills Payment Utility Bills Payment Payment of School Fees Payment of Taxes and Licenses Person-to- Person Transfer

8. E-money: Enhancing Access to Finance for MSMEs Loan Release Loan Payment Deposit Build-up

9. Loan Release 1 Upon loan application, client already indicates his e-money/e- wallet account number 2 Upon loan release, client shall receive an SMS notification on the credited loan proceeds to e-wallet 3 Client can go to any Cash Out center to convert electronic money to actual cash Loan amount has been credited to XXXXXXXXXX0005. Thank you for using this service

10. Loan Payment 1 Client chooses loan payment from menu, enters the amount to be paid, enters his PIN to authorize the transaction 2 Client and the lending bank shall receive an SMS notification upon fund transfer from client’s e-wallet to lending bank’s e- wallet 3 Lending bank records the loan payment made in step 2 Amount of P100 has been transferred to/from XXXXXXXXXX03452. Thank you for using this service

11. Deposit build-up 1 Client chooses text-a-deposit from menu, enters the amount, enters his PIN to authorize the transfer of e- money value from his wallet to bank’s wallet 2 Client and the depositary bank shall receive an SMS notification upon fund transfer from client’s e-wallet to depositary bank’s e-wallet 3 Depositary bank records the amount to the client’s deposit account. Amount of P100 has been transferred to/from XXXXXXXXXX03452. Thank you for using this service

12. Benefits to Users Reduced travel time & cost Reduced risk Convenient Availability Time saving

13. 1.Allow non-banks to offer e-money 2.Remittance Agents allowed to perform Cash-In/Cash-Out 3.Simplification of requirements for KYC 4.Formalized guidelines on issuance of electronic money 5.Allowed microfinance-oriented OBO limited transactional banking activities Creating an Enabling Environment with Proportionate Regulations

14. Latest BSP Regulatory Initiatives Circular 649 (January 2009)- Regulating the issuance of electronic money –Definition of e-money and EMIs –EMI as the supervised entity of Bangko Sentral –Qualification standards of both bank/ non bank issuers such as Capital, Risk Management and Liquidity Cover –Compliance to AML rules –Consumer protection standards including Adequate Disclosure

15. Latest BSP Regulatory Initiatives Circular 704 (December 2010)- Electronic Money Network Service Providers (EMNSP) –Smaller banks aiming to be EMIs can engage services of EMNSP –Stressed Due Diligence and Continuing Operational Review Circular No. 706 (January 2011) – Updated AML rules and regulations –Reduced due diligence for low risk clients –Reliance on third-party KYC Circular 694 (October 2010)- Microfinance-oriented other banking offices (MF-OBO) –MF-OBO can perform limited transactional banking activities: micro-deposits, release micro-loans, etc.

16. TASKS AHEAD Success breeds new challenges and risks. Steady advocacy for responsible finance Price transparency Consumer Protection Close monitoring of market practices and developments Financial literacy promotion

17. End of Presentation. Website: www.bsp.gov.ph E-mail address: mrcontreras@bsp.gov.ph