Liberal banking policies boost microfinance – BSP

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The number of Filipinos borrowing small-scale loans continues to grow this year as a result of a more liberal banking regulations, the central bank governor said on Tuesday.

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“We are able to craft policies and programs to keep the microfinance industry strong and healthy. This synergy between micro entrepreneurs and other industry stakeholders has produced solid results,” Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said at the awarding ceremony for the 14th Citi Microfinance Awards (CMA).

The latest data showed that microfinance loans increased by fivefold from P2.6 billion in 2002 to P11.7 billion as of end-June 2016.

The central bank defines microfinance loans as credit given to poor and low-income households to raise their income levels and living standards, marked by market-based interest rates and lower or no collateral requirements. Among the recipients of microfinance loans are farmers, fisherfolk and micro- and medium-scale entrepreneurs.

“We liberalized regulations by reducing barriers and providing incentives while balancing them with risk management measures,” Tetangco said.

“In particular we took into account the unique characteristics of microfinance such as the use of group liability arrangement, cash flow based and character lending, high frequency amortizations, and having less documentary requirement,” he added.

The BSP chief noted that 169 banks are now engaged in microfinance, compared with 119 banks in December 2002.

The number of borrowers also increased to 1.6 million from 390,635 in 2002.

“Our policy is working, as intended, as banks get more involved in microfinance,” he said.

Banks have also empowered their clients to save, Tetangco said, noting that microentrepreneurs accumulated savings of about P5.2 billion as of end-June this year.

“At present these microentrepreneurs have accumulated savings of P5.2 billion. In addition, the microfinance sector has become a market for microfinance products such as micro insurance and micro housing loans,” he said.

“Because of the significant strides that we have made together, the Philippines is considered a global leader in microfinance,” he said, citing that in the five years to 2013, the Economist Intelligence Unit (EIU) global survey on microfinance ranked the Philippines as number one in the world in terms of regulatory framework for
microfinance.

In its 2016 survey, the EIU ranked Peru and Columbia as the top 2 while India and the Philippines were third in the world and first in Asia with the most conducive environment for financial inclusion, he noted.

Improvements in overall access to financial services in the Philippines are also reflected in the World Bank Findex, the global data base for financial inclusion. Formal account ownership among Filipino adults increased from 26.6 percent in 2011 to 31.3 percent in 2014, with higher growth among low income and less educated segments of the population.

Winners

Honie Krizia Navor, a wholesaler and retailer of granite and tiles, stones and marble slates in Iloilo City, was named the national winner of the 14th Citi Microentrepreneurship Awards.

The other awardees were:

Richiel Vargas, producer and distributor of garments for bicycle and motorcycle riders, is the Regional Awardee for Luzon

Angelita Dagoc, owner of Ferangeli Guitar Handcrafter, Regional Awardee for Visayas

Marcelina Occeria, producer and retailer of Soup Wonder Herbal Oil, Regional Awardee for Mindanao

Kevin Pacatang, producer and distributor of native chocolate “tablea” and coffee, Youth Microentrepreneur of the Year

Receiving special awards are Manuel lwayan, who collects and recycles rubber tires, for Green/Sustainable Business; Renato Mercado, organic farmer and organic fertilizer wholesaler, for Agri Micro-business; and Wilberto Dagame, Willmar Homemade Candies producer and retailer, for Community Leadership.

Citi Philippines Chief Executive Officer Aftab Ahmed said in his welcome remarks that this year’s awardees once again substantiated the fact that it takes unwavering perseverance, a lot of hard work and commitment for entrepreneurs to achieve their dreams.

“This year, the 29 participating microfinance institutions and cooperatives submitted a total of 144 nominations highlighting the trials and tribulations faced by the nominees on their journey to success,” he said.

“From the initial submission, a total of 24 semi-finalists were picked and from this short list, 15 finalists were chosen. Eight entrepreneurs are being recognized today and are being awarded in acknowledgement of their success as business owners as well as for the many contributions made by them in creating employment opportunities in their respective communities,” he added.

Now on its 14th year, the awards program has been successful in recognizing entrepreneurs who have overtaken poverty with support from microfinance institutions as partners in financial inclusion and enterprise development.
Funded by Citi Foundation, this nationwide search for outstanding Filipino microentrepreneurs is a partnership among BSP, Citi Philippines, and the Microfinance Council of the Philippines Inc. (MCPI).

The awards are open to microenterprises with assets worth P300,000 to P3 million.

The national winner of the Citi Microentrepreneurship Awards will receive P200,000 while the three regional awardees, the youth awardee, and special awardees will each get P100,000. The loan officers and MFI branches of each awardee are also entitled to a cash incentive of P10,000 while the semi-finalists will receive a cash incentive of P10,000.

Beyond the award ceremonies, the CMA also ensures that awardees get access to supplementary tools that can help take their businesses to new heights. Aside from receiving microinsurance coverage and nine-day entrepreneurship training at the Citi Microenterprise Development Center, CMA winners will also get a laptop and basic computer training.

They also become automatic members of the CMA Alumni Network to build their market connections and participate in a mentoring program that will help them further improve their businesses.

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