DAGUPAN CITY?The closure of four rural banks in Pangasinan this month by the Bangko Sentral ng Pilipinas has sent the rural banking industry into an overdrive to win back the trust and confidence of depositors.

The BSP closed the Kaunlaran Rural Bank in Manaoag on Dec. 1, and the Rural Bank of Bautista, Rural Bank of Malasiqui and the Corfarm Rural Bank of Umingan on Dec. 10, putting the banks under receivership of the Philippine Deposit Insurance Corp. (PDIC).

Gregory de Guzman, president of the Joint Federation of Northern Luzon Rural Banks and special assistant to the president of the Pangasinan Rural Bank Dagupan, said the ?worse thing is it?s the strong banks that get affected.?

?We have to patiently explain the banks? condition to our clients, even presenting them the records to show that we are financially stable,? he said.

?The clients will test your stability by withdrawing large amounts. So we try our best to be liquid, meaning we always make it a point to have available cash for heavy withdrawals, even if we have to borrow from government financing institutions or other banks.?

If after a week of heavy withdrawals, the rural bank does not show signs of running out of cash, clients are pacified and the situation stabilizes, he added.

The rural banking industry is beaten black and blue from the recent events, primarily the impact of the collapse of the Legacy Group, De Guzman said.

The Legacy Group?s collapse painted a bad image of the rural banking industry and depositors thought they should not trust rural banks with their money, he said.

?The industry has not completely recovered from the stigma brought by the Legacy Group?s collapse,? he said.

Global warming, which brings calamities like typhoons, has also intensely hit the rural banks, he said.

This is because rural banks are encouraged to service the financial needs of farmers and fishermen, specifically for fertilizers and pesticides (farmers) and fingerlings and feeds (fishermen).

Farmers and fishermen usually pay after harvest, but when calamities strike, like the recent massive flooding that submerged and destroyed crops and overflowed fishpens, they can?t pay the loan, De Guzman said.

The rural banks help them by restructuring the payment. Farmers and fishermen sometimes opt not to plant or stock the following season and find other jobs like construction work.

?But small farmers and fishermen are the best of payers. When they are able to pay back from their earnings, they go to us to get loans again for their agricultural inputs,? De Guzman said.

Most rural banks are still family-owned and the officers and board members are usually siblings or close family members. Yolanda Sotelo, Inquirer Northern Luzon