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By Aurea Calica
The Philippine Star, September 1, 2005
President Arroyo underscored yesterday the importance of microfinance in generating jobs and spurring the growth of entrepreneurship nationwide.
In her keynote address before the Stakeholders’ Forum on Microfinance held the other day at Malacanang’s Heroes Hall, Mrs. Arroyo said one of her administration’s 10-point agenda is to develop three million entrepreneurs in 2004-2010 through microfinance and medium enterprise loans.
The President also directed the People’s Credit and Finance Corp., which is under the Department of Trade and Industry (DTI), to collate qualified microfinance “conduits” to make it easy for entrepreneurs interested in microfinance to avail themselves of services of these conduits.
“I have directed the People’s Credit and Finance Corporation to create a directory of microfinance conduits in each town and barangay of the country. This will serve as a guide for our countrymen interested with microfinance and how to go about availing themselves of the services of these conduits,” Mrs. Arroyo said.
Mrs. Arroyo also witnessed the awarding of checks amounting to PhP73 million representing microfinance loan releases to the different small business and cooperative beneficiaries in the country chosen by various government financial institutions (GFIs).
She said that from July 2001 to May 2005, the government has provided some PhP 20.79 billion in microcredits to 2.17 million borrowers nationwide.
The forum and check-awarding ceremony was held in line with the declaration of 2005 as the Year of Microcredit by the United Nations (UN) and the President’s issuance of Proclamation No. 719 declaring 2005 as the Year of Microfinance in the Philippines.
With its theme: Harnessing Microfinance for Jobs Generation and Entrepreneurial Growth, the forum hopes to increase people’s awareness of available and forthcoming microfinance services, raise pertinent concerns, suggest actions to deal with issues, and promote stronger partnerships among major stakeholders.
Microfinance is the provision of a broad range of financial services such as deposits, loans, payment services, money transfers and insurance products to poor and low-income households and their micro-enterprises.
The government’s microfinance program involves the extension of credit to poor and low-income households for as low as PhP 2,000 noncollateralized loans to as much as PhP 150,000 at competitive interest rates and the conduct of intensive social preparation and training of borrowers.
BSP may ease policies to boost microfinance
By Donnabelle L. Gatdula
The Philippine Star, October 11, 2005
The Bangko Sentral ng Pilipinas (BSP) is looking at the possibility of relaxing some of its banking policies to develop further the country’s microfinance industry.
In a speech during the National Microfinance Summit, BSP Governor Amando Tetangco, Jr. said the BSP continues to look at the other issues to further develop the sector as it aims to create a policy environment that will allow banks to have a wider scope for their microfinance operations, while protecting their depositors and the financial system.
Tetangco said among the areas that are currently under consideration are the branching guidelines and regulation.
He said they are also looking into the recognition of the various innovations in the delivery of microfinance services and new product designs for microfinance clients.
“In some cases, it may entail more flexible provisions, while in other cases it may entail more rigorous standards,” he added.
The BSP chief pointed out that the ultimate objective is that the policies and regulations seriously consider the needs of banks with microfinance operations in order to increase in outreach and sustainability.
As early as 2001, the BSP declared microfinance as its flagship program for poverty alleviation and has since then taken a pro-active stance to create an enabling policy and regulatory environment for sustainable microfinance operations.
The BSP was cited during the 2002 Microcredit Summit in New York for its efforts in promoting microfinance. In the book “Pathways out of Poverty” which was launched during the summit, the BSP was presented as a case study in creating a sound country regulation and policy framework for microfinance.
The book recognized the bank regulators in the Philippines “no longer base their risk assessments of microfinance portfolios on the underlying collateral, rather the regulators now look at the maintenance of excellent aggregate portfolio quality, with rigorous standards on loan loss provisioning and reserves and the adequacy of systems to evaluate risk and maintain portfolio quality.”
According to the BSP, this risk-based approach was further developed by creating a supervision and examination manual specifically for microfinance.
“The BSP is once again among the few central banks in the world with supervision and examination guidelines that are attuned to the peculiarities of microfinance operations,” he said.
The move of the BSP towards risk-based supervision as a general policy and specifically for microfinance has resulted in remarkable developments in the banking sector.
At present, there are nearly 200 banks engaged in microfinance operations providing an average of PhP 6,000 collateral-free loan each over half a million microentrepreneurs. This is a marked 200 percent increase in just four years.