Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila
NINETEENTH CONGRESS
First Regular Session
'.,   ``   '1
HOUSE BILL NO.
5983
Introduced by Representative Dante S. Garcia
EXPLANATORY NOTE
Financial   literacy  is  virtually  a  foreign   concept  to  most  Filipinos  with   only
twenty-five  percent  (25°/o)  of the  country's  population  are  aware  of such  construct.
This  is  generally  alarming  since  financial  literacy  plays  an  integral  part  in  ensuring
the sustainability of the country's economy.
Financial  inclusion  denotes  that  individuals  and  businesses  have  access  to
useful   and   affordable   financial   products   and   services  that   meet  their   needs   -
transactions,  payments,  savings,  credit,  and  insurance - delivered  in  a  responsible
and   sustainable   way.      However,   despite   inclusive   progress,   financial   inclusion
remains  very  limited.    According  to  the  Bangko  Sentral  ng  Pilipinas'  (BSP)  2019
Financial  Inclusion  Survey,  7 out of 10  Filipino adults are financially excluded or had
no formal financial account.   Financial exclusion disproportionately affects millions of
Filipinos in the lower income classes and those who are unemployed, less educated,
and belonging to the younger generation.   Many of the poor do not have the access
to  get  services  from  banks  or  financial  institutions.     For  several  years,  only  the
middle  and  high  classes  of  society  procured  formal  types  of  credit.    Poor  people
were  forced  to  rely  on  unorganized  and  informal  forms  of  credit,  apparently,  they
have  been  exploited  for years  in  the  context of financial  assistance.   Thus,  support
coming  from  financial  institutions  is  crucial  in  developing  and  promoting  inclusive
services to the underserved.
While  the   implementation   of  the   Philippine   Identification   System   (Philsys)
looks   promising,  financial   inclusion   in  the  country  is  still   impeded   by  economic,
physical,  and  behavioral  issues that need  addressing.   According to the 2019  BSP-
FIS, forty-eight percent (48%) of Filipino adults are not using the internet for financial
transactions due to lack of trust.   Thus,  improving the financial and digital literacy will
certainly address those physical and behavioral challenges.
The  proposed  measure  addresses  all  these  physical  and  economic  issues
and  behavioral  challenges  by developing  an  inclusive  digital  ecosystem,  promoting
digitalization  of rural  businesses,  and  leveraging  innovative technology to effectively
regulate  and  supervise  digital  finance  that  will  cater  to  the  diverse  needs  of  the
marginalized   sectors   such   as   small   farmers,   fisherfolks,   and   micro,   small,   and
medium  enterprises  (MSMEs).    This  measure  will  also  focus  on  providing  reliable
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financial  solutions  to the  economically  underprivileged  sectors  of society.    Through
its  program,  this  measure  would  spread  awareness  about  financial  services,  and
financial management, and would also develop formal and systematic credit avenues
for poor people.
In   view   of  the   foregoing,   immediate   approval   of  this   measure   js   highly
recommended.
D
Represen
2
ARCIA
District,  La Union


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila
NINETEENTH CONGRESS
First Regular Session
HOusE BIL`i^ri`O.    5983
Introduced by Representative Dante S. Garcia
AN ACT PROMOTING RURAL FINANCIAL INCLUSION AND LITERACY
Be i,t enacted. Py _the Serunte cmd the House of Representatives of t,he Philippines
i,n Congress crssembled,..
SECTION 1. Short rjtle. - This Act shall be known as the "Rural Financial
Inclusion and Literacy Act."
SEC.  2.  DecJarof ion  a/ Pozfey.  -  It  is  the  policy  of the  State  to  promote
financial empowerment  and reduce  financial vulnerabilities  among its  citizens by
taking proactive measures in developing technological capacities of various financial
institutions in the rural areas to improve access to financial services.   Toward this
end, the State shall promote financial inclusion and literacy programs that contribute
in establishing a financial system to benefit all Filipinos, regardless of socio-economic
status,  to  accelerate  economic  growth  and  development  especially  in  rural  and
provincial areas.
SE}C. 3. Fi,nanciaz Inclusi,on c.nd Digitat Literacy Progrcbm. ~ Aproalctive
Financial   Inclusion   and   Digital   Literacy   Program,   hereinafter  referred   to   as
Program,  is hereby established to  promote  the  engagement with financial  service
institutions  such  as  rural  banks,   lending  companies,   insurance   and  pre-need
companies,  and  health  maintenance  organizations  (HMOs)  in  rural  areas.    The
Program includes the conduct of nationwide seminars and workshops,  development


of modules, trainings on organizational development and financial management on
credit  worthiness,   loan  acquisition  and  repayment,   and  wide  dissemination  of
information and education campaign (IEC)  materials that are  tailored to different
sectors.
The program shall also contain a basic understanding of concepts of financial
inclusion, and may include technical application to provide the public with knowledge
and skills to make well-informed economic and financial decisions.  Priority sectors
shall include,  small farmers,  fisher folk,  and micro,  small,  and medium enterprises
(MSMEs).
SEC. 4. Program Jmpfemenfo££or.. - The Program shall be implemented by
the  National  Financial  Inclusion  Steering  Committee   (NFISC)  chaired  by  the
Governor of Bangko Sentral ng Pilipinas (BSP).
For  a  more  inclusive  implementation,  local  government units  (LGUs),  non-
government organizations  (NGOs)  and  civil  society organizations  (CSOs)  network,
federation  of cooperatives,  cooperatives  specially  assisted  by  the  Department  of
Agrarian Reform  (DAR),  shall also be  included.  Completion of a component of the
Program may be used to comply with the requirements of financial institutions on
various  financial  products  such  as  savings,  payment  credit,  insurance,  pre-need
products and health maintenance services (IIMOs).
The  NFISC,  together  with other  stakeholders,  shall  optimize  the  use  of all
available   mass   media   networks   as   an   effective   channel   in  promoting  public
awareness and education about the Program.
SEC.  5.  Capacity Building  for Rural Banks.  - Rnral baLnks,  and other
financial institutions such as micro finance institutions and cooperatives operating in
the rural areas shall establish capacity-building programs aimed at improving the
knowledge  and  skills  of their  personnel  on  innovative  technologies  such  mobile
payments,   online  lending,   blockchain  application,   cloud  computing,   application
programming     interface     (APD,      and     artificial     intelligence.     Cybersecurity
considerations and data privacy protection under Republic Act No.  10175, otherwise
known  as  the  "Cybercrime  Prevention Act  of 2012"  and  Republic  Act  No.  10173,
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otherwise  known  as  the  "Data  Privacy  Act  of  2021"  shall  be  considered  and
incorporated in the capacity-building program.
To  further  scale  up  the  technology  capabilities  of rural  banks,  the  Rural
Bankers  Association  of the  Philippines  (RBAP)  may  assist  its  member  banks  by
establishing industry-level  standards  on internet technology  (IT)  outsourcing  and
vendor  management  such  as  those  pertaining  with  other  recognized  industry
associations  such  as  other  bank  associations,  financial  technology  alliances,  and
reputable   market   players   in   organizing   technology-focused   briefings   and   or
information sessions for its member banks.   Moreover,  rural banks shall adhere to
and  comply with  relevant  BSP  rules  on  technology  and information  security  risk
management.
EEC. 6. Nationaz Financial Inclusi,on Steering Commi,ttee. -rTo ELrther
systematically   accelerate   financial   inclusion,   the   National   Financial   Inclusion
Steering  Committee  (NFISC)  which  is  chaired by  the  Governor  of the  BSP  shall
spearhead collaborative efforts to address regulation and execute innovative modes
of implementation.
The NFISC is composed of heads of the following government agencies:
(a)  Department of Finance;
a) Department of Education;
(c) Department of Trade and Industry;
(d)  Department of Social Welfare and Development;
(e)  Department of Budget and Management;
(f)  National Economic and Development Authority;
(g)  Insurance Commission;
(h) Commission on Filipinos Overseas;
(i)  Securities and Exchange Commission;
¢)  Philippine Statistics Authority;
(k) Philippine Deposit Insurance Commission;
(I)  Cooperative Development Authority;
(in) Department of Science and Technology;
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(n) Department of Information and Communications Technology;
(o) Department of Agriculture;
(p) Department of Agrarian Reform;
(q) Department of Interior and Local Government;
(r) Department of Labor and Employment;
(s) Department of Transportation; and
(t) Philippine Commission on Women.
Heads  of  other  government  agencies  may  be  invited  as  NFISC  members
whenever appropriate and necessary as deemed by the NFISC.
Further,  the  NFISC  shall prepare  a roadmap  for the  Program  to cover  all
regions,  barangays,   and  the  smallest  units  in  the  community,   and  provide  for
mechanisms that protect and boost financial activities especially within the provinces
and rural  areas.   The roadmap  shall prioritize  areas identified  with high poverty
incidence,  particularly  the  poor  and  marginalized  sectors  of  small  farmers  and
fisher folk who have limited access to credit from formal financial institutions.
Consultation   with   government   financial   institutions   (GFls)   should   be
continuously undertaken to address potential technical or administrative issues to
ensure the  effective  and efficient roll out  of financial technology among Filipinos,
especially residing in rural communities and remote areas.
All these government financial institutions and agencies shall also cooperate
in the implementation of the National Strategy on Financial Inclusion,  which is a
comprehensive   public  document  developed  through   a  broad-based  consultative
process  with  private  and  public  sector  stakeholders  involved  in  financial  sector
development  to  systematically  accelerate  the  level  of  financial  inclusion  in  the
country.
SEC.  7. Przoritry Jmpzemenfaffon Pol.nts. -There shall be priority agenda
implementation points to establish a digital financial ecosystem that supports the
diverse needs of all users in a manner that is secure,  sustainable,  convenient,  and
affordable,  especially in provinces  and rural areas.  These priority implementation
points include the following:
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a.   Enhanced access to digital devices by strengthening local infrastructure
support for digital and online platforms;
b.   Provision of automated teller machines  (ATMs)  and satellite  rural bank
offices;
c.   Efficient retail payments system;
d.  Expansive network of low-cost touchpoints and accredited cash agents;
e.   Democratized access to a transaction account through the utilization of a
national  identification  system  as  mandated by  Republic Act  No.    11055,
otherwise  known  as  the  "Philippine  Identification  System  Act"  (Philsys
Act);
f. Enhanced collaboration with rural financial institutions such as rural banks,
cooperatives,   micro  finance  institutions,   and  other  non-bank  financial
institutions   (NBFls)   such  as   lending   and   financing   and   investment
companies, securities dealers, brokers, pawnshops and ot.her money service
businesses;
9.   Enhanced Technology Empowerment for Education Employment Program
of the Department of Information and Communications Technology (DICT)
which  provides  critical  information  communications  technology  enabled
services  in  communities  with  minimal  or  no  access  to  information  and
government  servicers  and  learning  and  continuous  skills  development
opportunities for special sectors including women, persons with disabilities,
and senior citizens.
SEC. 8.  Irmplementing Rules arbd Regulatior.s. -Within winety (90) days
after the effectivity of this Act, the Governor of the Bangko Sentral ng Pilipinas and
Members  of  the   NFISC  shall,   in  collaboration  with  the  representatives  from
government financial institutions, Rural Bankers Association of the Philippines, and
other  stakeholders  issue  the  necessary  rules  and  regulations  for  the   effective
implementation of this Act.
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SEC.  9.  Seporobjzfty Cga"se. - If any provision or part of this Act is held
invalid or unconstitutional, the remaining provisions or parts unaffected shall remain
in full force and effect.
SEC.  10. Repeazimg Czclz4se. -Alllaws, executive orders, presidential decrees
or  issuances,  letters  of instruction,  administrative  orders,  rules,  and  regulations
contrary  to  or  inconsistent  with  the  provisions  of this  Act  are  hereby  repealed,
amended, or modified accordingly.
SEC.  11.  Effecf£LJftry.  -This  Act  shall take  effect  fifteen  (15)  days  after  its
publication in the Official Gazette or in a newspaper of general circulation.
Approved,
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