16

Sa-Dhan Patrika

Volume 6

Issue 1

more efficiently. In 1997, the National

by the General Banking Law (GBL) of 2000

Strategy for Microfinance was approved

to recognise the peculiar characteristics

with a vision to have a viable and

of microfinance and establish the rules

BSP was

sustainable microfinancial market and to

and regulations for its practice within the

mandated by the

provide  poor  households  and

banking sector. Specific provisions in the

General Banking

microentrepreneurs greater access to

GBL which recognise these peculiar

Law (GBL) of 2000

microfinancial services. The National

characteristics can be found in Sections

to recognise the

Credit Council (NCC), an interagency

40, 43 and 44. Taking this task at hand,

peculiar

body under the nation's Department of

the BSP has also declared in 2000 that

characteristics of

Finance, was also created to provide a

'microfinance' will be its flagship program

microfinance and

market-oriented financial and credit

for poverty alleviation. The initiatives and

establish the rules

policy environment that will promote

programmes of BSP have been in the

and regulations

a n d support private microfinance

areas of: 1) Policy and Regulatory

for its practice

institutions to broaden and deepen their

Environment; 2) Training and Capacity

within the banking

services. The Credit Policy and

Building within BSP and the banking

sector

Improvement Program (CPIP), a bilateral

sector; and 3) Promotion and Advocacy.

donor assisted programme, is providing

Snapshot of Microfinance in the

technical assistance to the NCC.

Philippine Banking Sector

Private Sector Initiatives

As a result of BSP's active support and

The Philippines has seen an increased

numerous initiatives for microfinance,

number of private institutions engaged

below is a snapshot of the status of

in microfinancial services. In a survey

microfinance within the banking sector:

conducted by the Microfinance Council

1)  As of June 30, 2004 there are six

of the Philippines, Inc. or MCPI (which is

microfinance-oriented banks with 16

a network of 34 institutions including 26

b r a n c h e s licensed under BSP

practitioners and eight service providers

Circular 273 (February 2001) with

involved in microfinance development

microfinance loans outstanding of P

in the Philippines), it showed that the

389.493 million involving 72,671

banking sector envisions an increase in

micro-borrowers. There are also 173

their microfinance activities in the

rural and cooperative banks with

coming years reflecting as much as a 300-

502 branches with some level of

per cent increase from their current

microfinance operations with loans

microfinance outreach. In addition, 60

outstanding of P 2.805 billlion

per cent of the respondent NGOs and

involving 469,843 micro-borrowers.

50 per cent of the cooperatives

2)  S a v i n g s

generated

from

expressed their interest in formalising into

microfinance borrowers by banks

a bank or establishing a separate

engaged in microfinance operations

banking unit.7

aggregated P 792.805 million as of

30 June 2004.

A recent performance report by MCPI

3)  BSP has granted rediscounting

further showed that commercially viable

facilities to nine banks with a total

microfinance institutions have been able

outstanding of P 22.537 million as of

to expand their reach to wider

N o v e m b e r 30, 2004. Since the

geographical areas and have been able

opening of the rediscounting facility,

to provide a more extensive range of

the total amount disbursed already

financial services to their clients. Aggregate

totalled P210.868 million.

data for the 21 reporting MFIs or (62 per

4)  T h e r e a r e n o w 6 5 ( o u t o f 8 0 )

cent of the MCPI members) show impressive

provinces served by banks with

gains in the number of clients, gross loan

microfinance operations.

portfolio, and amount of client savings over

Lessons Learned

a three-year period from 2001 to 2003.8

Because of this increased competition, the

The main lessons learned from the

environment allows for an expansion of

Philippine experience in microfinance

products and services, innovations in

practice can be summarised into four key

methodologies and lowering of services.

success factors of MFIs or the four 'Cs'.

Microfinance institutions are moving

These are:

towards improving and innovating their

·

Clearly identified market

services while maintaining sound and

·

Capable and committed staff

sustainable operations.

·

Creative methodologies and

technologies

Some important initiatives undertaken by

·

Commitment to standards and best

practitioners are: 1) establishing

practices.

performance standards and 2) moving

towards the strengthening of a credit

First, knowing the financial institution's (FI)

b u r e a u focused on microfinance

client is a must, both in regular banking

institutions.

and in microfinance, before giving him a

loan so that the FI can determine the

BSP Initiatives

kind of package to give to him.

As regulator and supervisor of the

Microfinance, however, goes beyond

banking system, BSP has taken significant

knowing the client. One must also have

strides in promoting microfinance within

to improve and develop the client's

the banking sector. BSP was mandated

knowledge and skills.