The Philippine Postal Savings Bank now rebranded as Postbank is being revitalized as it shifts gears to help bring economic development to the countryside. The new focus, actually a return to its original mandate, is to provide banking services to the unbanked and underserved municipalities of the country, offering micro loans to Filipino entrepreneurs in the rural areas, and providing financial assistance to LGUs to allow them to address such basic community needs as water, power, health and sanitation, and housing.
Postbank tells of an interesting journey of an institution going back to its roots to give meaning to its founding after a century of lackluster existence. Meant to make a difference in the rural landscape as a bank for people in the countryside, Postbank operated for a century like any conventional bank. It is now determined to play a role in the principal government objective of financial inclusion in order for the benefits of economic growth to filter down to the rural areas where poverty and unemployment abound. The Philippine Postal Savings Bank was established by the Philippine government way back in May 24, 1906 through Republic Act 1493. The bank was to be a Division of the Bureau of Posts.
The PPSB‘s most important mandate back then was to serve depositors and provide financial access to the rural areas. The end result of this, ideally, would be to drive economic development to the countryside.
Unfortunately, after decades of operation, PPSB was unable to satisfactorily fulfill its mandate. The bank was closed during the Japanese occupation and again in the 1970s during the martial law regime when the Philippine government decided that PPSB was unduly competing with the private banking sector and phased out its operation and its eventual dissolution. The Philippine National Bank served as the PPSB’s liquidator.
Under the Ramos administration, with the Philippine economy on the upswing, the government decided that re-opening the Philippine Postal Savings Bank as a subsidiary of the Philippine Postal Corporation (PHLPOST) would help bring economic development to the countryside. The PPSB re-opening in 1996 was part of the Macroeconomic & Development Financing Policy enunciated in the Ramos Administration’s Medium-Term Philippine Development Plan, 1993-1998. Its mandate was to “develop the rural financial sector to ensure adequate supply of credit to the countryside”.
Through the years since it was re-established, the Bank posted modest gains, displaying some stability and resiliency; however, the Bank’s growth remained at a plateau, with a limited capability to carry on its mandate.
This is why, in 2011, consistent with President Aquino’s commitment to bring economic development down to the grassroots, a revitalization of Postbank was carried out. Under the new management, the Bank is now going through a transformation process and is well on its way to growth.
Postbank’s strategy to bring financial services to the unbanked and underserved areas is elegantly simple but potentially effective: in a synergistic cooperation with the Philippine Postal Corporation, the latter’s post offices around the country -- numbering about 1500 -- will house the micro banking offices of Postbank over time. Selected offices will also provide domestic and foreign remittance services as well as assist the bank in the delivery of core banking services.
It is a strategy that is doable because of the existing infrastructure: since there are already existing postal offices in all municipalities and cities, there’s no longer any need to build new structures, thus avoiding the need for brick-and-mortar expenses. Besides, the Bank can have access to the existing facilities and manpower of the Post offices.
These micro banks will provide deposit and micro-loan services to individiual clients and organized groups as well as core banking products such as loans to commercial enterprises, SMEs, LGUs, agri-businesses, salary/consumption loans, and other conventional banking products/services.
Postbank will also provide financial access to the unbanked and underserved municipalities so they can provide delivery of basic services, such as water, power, health and sanitation, and housing and others, thus improving the life quality of their constituents.