BSP exec urges investments in bonds, businesses

DAVAO CITY (MindaNews/03 July) – Mindanaoans should not be afraid to invest their income in financial or debt instruments, or put up a business that could increase their money, a Banko Sentral ng Pilipinas (BSP) official said.

The BSP, citing results of its Philippine Consumer Financing Survey (CFS), has noted that Filipinos have remained wary of investing in bonds or put up a business to increase their income.

The refusal to expose their income to business activities and other financial ventures due to perception of risks involved was rather high among Filipinos, at 70 percent, who would rather “chose to stick to their current level of sure income,” the BSP said.

The BSP did not offer any explanation beyond saying that it has widened the coverage of its micro-financing activities.

“Probably because many Filipinos remained unbanked, or have not accessed or felt the homely atmosphere of banking services that many of Filipinos are afraid of taking risks,” said Diwa C. Guinigundo, BSP deputy governor for monetary stability sector.

The survey said that four in every five persons were unbanked or have not accessed bank services, not only due to lack of extra income but also to the high maintaining balance requirement and the discouraging low interest on deposits.

“We tweaked the supervising and regulating agencies of the Central Bank to relax banking rules, like, not to require collaterals, at least in microfinancing and microlending,” he told reporters after briefing the business and banking community here on the result of the CFS.

“For loans and financing not more than P150,000, bank clients need not be required to produce land titles, cars or machineries as collaterals,” he said. This amount is the limit for microfinancing.

For those trying to explore the government debt instruments, Guinigundo also assured household investors who harbor suspicion of a cartel in bond offerings that “there are no cornering of bonds in the market”.

He said that government periodically floats bonds and securities to finance its spending “and government usually tell the BSP about this and then inform several banks and investment houses to start bidding for their allocation”.

“Banks and investment houses put up their bid and government distribute the bonds to several conduits,” he said.  The banks, in turn “sell down” the bonds to their clients.

“There may be a likelihood that the bank itself would buy all the bonds allocated to it,” a BSP source said on condition of anonymity.


But Guinigundo said that the distribution of the bonds to several BSP-accredited conduits make it less likely for the moneyed individuals or corporations to corner the bulk of the bond floatation.

“There is a BSP policy requiring the banks to sell down the bonds or securities to their clients,” he added. (MindaNews)