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Manila Bulletin devider Business devider Banking & Finance devider BSP to fund rural banks' three-year digital shift, excluding undercapitalized lenders

BSP to fund rural banks' three-year digital shift, excluding undercapitalized lenders

Published Aug 24, 2026 06:00 pm  |  Updated Aug 24, 2026 03:45 pm

At A Glance

  • While the Bangko Sentral ng Pilipinas (BSP) offers to shoulder rural banks' digitalization costs for up to three years, undercapitalized lenders will be barred from receiving the support.

While the Bangko Sentral ng Pilipinas (BSP) offers to shoulder rural banks’ (RBs) digitalization costs for up to three years, undercapitalized lenders will be barred from receiving the support.

BSP Governor Eli M. Remolona Jr., through Memorandum No. M-2026-042, outlined the rules for the Rural Bank Strengthening Program (RBSP) digitalization technical assistance (TA), which was greenlit in 2024. This effort enables eligible entities to shift from outdated local hardware to modern cloud-based core banking systems (CBS) through a subscription model.

Availing of the support is not automatic. The BSP detailed a structured application process that requires banks to submit capital certifications, information technology (IT) risk assessments, and a formal board-approved agreement.

To qualify for the support, RBs must meet the minimum capital required by the BSP. This criterion will be assessed using the lender’s latest financial reporting package (FRP). If the capital is found to be below the threshold, the application will be returned unprocessed.

Under BSP Circular No. 1151, RBs with a head office and up to five branches are required to maintain at least ₱50 million in capital. Those with six to 10 branches are mandated to keep a minimum of ₱120 million, while those with more than 10 branches are mandated to maintain at least ₱200 million in capital.

Those that have submitted an intent to seek assistance should have submitted, from Sept. 21, 2022, to Sept. 21, 2025, an application or letter of intent for a merger or consolidation; acquisition or third-party investment; upgrade of a banking license; or capital build-up program.

Eligible lenders are also those without an existing subscription to a cloud-based or software-as-a-service (SaaS) CBS upon filing their application.

Successful applicants will receive financial and technical support covering an initial six-month implementation phase, followed by a three-year subscription period. This will give RBs time to strengthen their operations before taking on the full software costs themselves.

Approved TA covers digitalization, financial advisory, and capacity-building programs aimed at speeding up rural banks’ digital transformation while improving their efficiency and competitiveness.

To be exact, the support will include “the services necessary to implement and operationalize the CBS, such as system configuration, data migration, system integration, testing, user training, commissioning, cloud infrastructure, technical support, system updates, and maintenance services.”

Migrating a CBS to the cloud typically follows rigid and exhaustive material IT outsourcing checks under BSP rules. To cut red tape from this process, the BSP could “streamline and calibrate” its regulatory processes specifically for this program, making it faster for eligible RBs to receive approval and deploy their new cloud systems.

It also bears noting that this streamlining will not compromise the process; the BSP will still strictly assess each bank’s readiness and capacity to effectively manage the SaaS CBS.

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