BSP Mandates P1-B Capital for Banks Shifting to Digital Models

The Bangko Sentral ng Pilipinas (BSP) has issued a circular mandating a minimum P1-billion capital requirement for thrift, rural, and cooperative banks that are shifting to digital bank business models. Under Circular 1240, dated September 21, 2026, these banks will have six months to comply with the capital requirement, in addition to the prudential standards applicable to digital banks. Proposals to transform a thrift, rural, or cooperative bank into a technology-driven business model will also be subject to the P1-billion minimum capital requirement at the time of application. The requirements apply to thrift, rural, and cooperative banks that either operate like digital banks, or whose risk management and capital are no longer aligned with their business model and risk profile, as well as those utilizing digital platforms with significant growth in loans or deposits. "The requirements aim to ensure that these banks can adequately manage risks arising from the nature, scale, complexity, and risk profile of their operations," the BSP stated. "The BSP continues to promote responsible innovation and prudent digital transformation while safeguarding the banking system." This move by the BSP aims to create a level playing field between fully digital banks and "digital-centric" conventional banks. Currently, the six banks that have secured digital banking licenses are GOTyme, Maya Bank, Overseas Filipino Bank (OFBank), Tonik Bank of Singapore, UNObank of Singapore, and UnionDigital of Union Bank of the Philippines. This regulatory update comes as the fintech sector in the Philippines experiences rapid growth, with many financial institutions accelerating their digital transformation initiatives. The increased capital requirement is seen as a measure to bolster the stability of the banking system amidst this rapid evolution and to further protect consumers.