​BSP tightens capital requirements for smaller lenders acting as digital banks

MANILA—The Bangko Sentral ng Pilipinas has mandated a P1-billion minimum capital requirement for thrift, rural, and cooperative banks adopting digital-centric business models.

“The requirements aim to ensure that these banks operate in a safe and sound manner,”the BSP said.

Under Circular No. 1240 issued September 21, the BSP ruled that smaller lenders operating under business models similar to digital banks must meet the P1-billion minimum capital threshold required of full-fledged digital banks.

Covered institutions will have six months from receiving formal notification from the central bank to meet the capitalization requirement and align with stricter prudential standards.

The P1-billion capital rule will also apply at the time of application to any proposed acquisition intended to transform a small lender into a technology-driven bank.

Regulators said the circular targets banks using digital platforms that record significant growth in loan or deposit balances, as well as institutions whose risk management systems and capital are no longer commensurate with their operational risk profile.

“The requirements aim to ensure that these banks operate in a safe and sound manner” and can adequately manage risks arising from the scale and complexity of their operations, the BSP said.

The central bank added that it may impose enhanced supervisory reporting, restrictions on new digital products, and strengthened risk controls on affected lenders.

The rules also allow qualified institutions to apply for formal conversion into licensed digital banks, enabling them to expand services beyond traditional geographic limits. The Philippines currently has seven licensed digital banks.