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Republic of the Philippines
House of Representatives
Quezon City

TWENTIETH CONGRESS
First Regular Session

HOUSE BILLNO_3961

Introduced by Rep. Dante S. Garcia and Rep. Kenneth Paolo Tereng

EXPLANATORY NOTE

Financial literacy is virtually a foreign concept to most Filipinos with only twenty-five
percent (25%) 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
financial solutions to the economically underprivileged sectors of society. Through financial
management, and would also develop about formal and systematic credit avenues for poor people.

In view of the foregoing, immediate approval of this measure is highly recommended.

D. GARCIA ets Sire EN

2"District, La Union KM Ngayon Na Party-list



Republic of the Philippines
House of Representatives
Quezon City

TWENTIETH CONGRESS
First Regular Session

HOUSE BILLNO_3561

Introduced by Rep. Dante S, Garcia and Rep. Kenneth Paolo Tereng

AN ACT PROMOTING RURAL FINANCIAL INCLUSION AND LITERACY

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Short Title. - This Act shall be known as the "Rural Financial
Inclusion and Literacy Act."

SEC. 2. Declaration of Policy. - \t 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.

SEC. 3. Financial Inclusion and Digital Literacy Program. - A proactive
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, fisherfolk, and micro, small, and
medium enterprises (MSMEs).

SEC. 4. Program Implementation. - The Program shall be implemented by the
National Financial Inclusion Steering Committee (NFISC) chaired by the Governor
of Bangko Sentral ng Pilipinas (B,SP).

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 (HMOs).

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. - Rural banks, and other financial
institutions such as microfinance 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 (API), 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, 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.

SEC. 6. National Financial Inclusion Steering Committee. - To further
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;

(b) Department of Education;

(c) Department of Trade and Industry;

(d) Department of Social Welfare and Development;
(e) Department of Budget and Management,

(t) 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;

(1) Cooperative Development Authority;

(m) Department of Science and Technology;


(n) Department of Information and Communications Technology;
(0) Department of Agriculture;

(p) Department of Agrarian Reform;

(q) Department of Interior and Local Government;

(t) 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 fisherfolk who have limited access to credit from formal financial
institutions.

Consultation with government financial institutions (GFIs) 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. Priority Implementation Points. - 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:


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 (NBFIs) such as lending and financing and investment companies,
securities dealers, brokers, pawnshops and other money service businesses;

g. 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 leaming and continuous skills development
opportunities for special sectors including women, persons with disabilities,
and senior citizens.

SEC. 8. Implementing Rules and Regulations. - Within ninety (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.


SEC. 9. Separability Clause. - 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. Repealing Clause. - All laws, 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. Effectivity. - This Act shall take effect fifteen (15) days after its
publication in the Official Gazette or in a newspaper of general circulation.

Approved,