The Bangko Sentral ng Pilipinas has been asked by a legislator to assess the status of all rural banks to ensure the protection of both the depositors and the country's banking system.

The call came in the wake of the closure of several rural banks last December, particularly those under the Legacy Group.

Aurora Rep. Juan Edgardo Angara said the BSP should first approve the activities of these banks before they are issued a license to operate.

Among those that declared a bank holiday last month was the Nation Bank branch in Bacolod City, and seven other rural banks in the Visayas and Luzon. Several more were placed under BSP receivership.

BSP said in a statement then that it is investigating the banks to determine their financial condition and viability, and asked the public not to speculate on the fiscal situation of banks.

It is determining if the banks have committed violations of banking laws, and will take appropriate action based on the findings, it added.

At the House of Representatives, Dr. Johnny Noel Ravalo, citing results of the BSP investigation, told legislators the closure of the rural banks was triggered by excessive interest rates, investments in other companies that offer lucrative investment returns, and mismanagement.

But he said their closure did not, in any way, affect the country's rural banking system. Still, the BSP is undertaking several measures to further bolster bank depositors' confidence, he added.

BSP figures show there are 655 rural banks nationwide as of January 19, 2009.

As of June 2008, asset accounts of rural banks amounted to P161.088 billion.*NLG

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