A study on the rural banks operating in the National Capital Region

Date of Publication

1994

Document Type

Bachelor's Thesis

Degree Name

Bachelor of Science in Commerce Major in Management of Financial Institutions

College

Ramon V. Del Rosario College of Business

Department/Unit

Financial Management

Abstract/Summary

Rural Banks were created to answer the credit needs of folks in the rural areas. They cater to small and medium scale businesses, such as farmers, fishermen, vendors and the like. They aim to contribute to the development of the countryside. However, rural banks are not fulfilling their roles as rural banks because they do not grant loans to high risk clients, such as market vendors would not have the capacity to pay back their loans.The existence of a rural bank in an urban municipality such as the NCR may be attributed to the fact that these areas were once rural areas. It can be noted, however, that since these areas have evolved into urban areas, the rural banks in this area are now subject to a different environment as compared to rural banks in the rural areas.Rural banks in the NCR ranks the highest among the whole industry in terms of its resources. This shows that though, they are in the urban area where there are less agricultural clients, still leading in terms of performance compared to rural banks in the rural areas. The significance of their presence in the industry can not be disregarded. As a support to the country's vision of promoting a comprehensive rural development, the government must give support to the industry. There are several incentives and privileges given to this industry, like exemption from tax and other fees, as embodied in the Rural Banks Act of 1992. However, these rural banks are also not spared from regulatory conditions set by the Bangko Sentral ng Pilipinas. One example of this is the fact that the rural banking operations and functions are enumerated in the Rural Banks Act that somehow limit rural banks' products and services. As a result, they can not offer some products which other banks, such as commercial and development banks in the urban areas.The marketing executives of the rural banks in the NCR will have greater challenge in making the banks' competitiveness at par with other banking institutions. Any decision that will be made will affect the performance of the bank. The demand and supply of the bank's products and services will be highly dependent on the strategy the bank will employ. Marketing executives will also be challenged in making their over-all marketing mix fit the conditions in the NCR as this is already an urban area. They have to devise a mix that will suit the conditions of the banks' environment. People, place, promotions, pricing, and product will have to be considered. They will also have to find ways to cope with the competition posed by other rural banks and other financial institutions, like the commercial and development banks in this area.Both rural banks in the NCR and in the rural areas, have similar functions and services. They only differ with their clientele and the benefits they can avail from the Bangko Sentral ng Pilipinas. Rural banks in the NCR do not avail of some benefits given by the government, like rediscounting papers from the BSP or Land Bank of the Philippines because they do not have borrowers for agriculture, since there is no agricultural land to cultivate in this area.

Abstract Format

html

Language

English

Format

Print

Accession Number

TU06598

Shelf Location

Archives, The Learning Commons, 12F, Henry Sy Sr. Hall

Physical Description

123 numb. leaves

Keywords

Rural banks; Banks and banking; Bank management; Industry and state

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