Microfinance growing despite fewer players


Microfinance (MF) has become an integral component of widening access to finance among poor and low-income households, and although the number of banks and clients in the sector fell in 2013, loans and deposit portfolios have increased, the central bank said.

In its 2013 Report on the State of Financial Inclusion in the Philippines, the Bangko Sentral ng Pilipinas (BSP) said there is now a wide range of products such as microfinance loans, micro-agricultural loans, microfinance housing loans, micro-deposits and microinsurance that are available to a previously unbanked market.

As of 2013, the country had 182 banks with microfinance operations serving 1.05 million borrowers in the country.

The number of microfinance banks and clients has declined slightly from 2012, when there were 187 banks serving 1.14 million clients, but loan and deposit portfolios in all categories increased from 2012 to 2013, it said.

Microfinance loan portfolios expanded by 3 percent to P8.7 billion in 2013 from P8.4 billion in 2012. In the microenterprise loan category, a 7 percent expansion to P7.4 billion from P6.9 billion was recorded despite a decline in the number of banks offering microfinance loans to microenterprises to 168 from 171.

Housing microfinance loans increased by 9 percent to P263 million in 2013 from P242 million in 2012, while Microfinance Plus loans, which are loans of between P150,001 and P300,000 specifically designed for growing microenterprises, climbed by 34 percent to P111 million in 2013 from P83 million in 2012, the report said.

“While there have been increases in product offering, the BSP looks forward to seeing a growing trend in the number of banks offering these different microfinance loan products,” the report added.

The 2013 Report said since 2000, the BSP has been proactive in the development of microfinance in the banking sector.

“The BSP experience in microfinance proved that low income segments can be effectively served by the formal financial system given appropriately designed and affordably priced products and services,” the report stated.

Deposits on the rise
The BSP also recorded a rise in micro-deposit accounts, which are savings accounts that cater to the needs of the basic sectors and low-income individuals by removing the usual barriers faced in opening a bank account such as high maintaining balance requirements and dormancy charges.

According to the report, micro-deposit accounts have been on an uptrend as the number of banks offering these accounts rose by 19 percent to 69 banks in 2013 from 58 banks in 2012, resulting in significant growth in the volume and value of micro-deposit accounts.

The total amount of micro-deposit accounts went up by 27 percent to P2.96 billion in 2013 from P2.33 billion in 2012. In terms of volume, the total number of micro-deposit accounts surged by 36 percent to 1.5 million accounts in 2013 from 1.1 million accounts in 2012.

Microinsurance gaining traction
In terms of microinsurance, the BSP report said that in 2013, there were 81 banks which had received “no objection” notices from the central to offer microinsurance, while 40 banks had already obtained authority to market, sell and service microinsurance products.

Data from the Rural Bankers Association of the Philippines showed that the total number of insured clients by rural banks with microinsurance rose by 153 percent to 1.4 million in 2013 from around 543,500 in 2012.

In addition, data from the Insurance Commission said microinsurance coverage among Filipinos rose to 19.95 million (20.4 percent of the population) in 2013 from 3.1 million (3.4 percent of the population) in 2008, the report noted.

In light of this growth, the BSP report said the improving microinsurance coverage in the country makes the Philippines one of the top microinsurance markets in Asia.

“The strong support by the insurance providers and warm reception by policyholders were cited as significant factors contributing to the phenomenal growth of microinsurance in the country,” it said.


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  1. I do not agree with this observation by the BSP, these micro finance they are stating are the loan sharks. Truly there are microfinance conduits but they interest are also high and demand collaterals and securities. How can you apply for a micro-finance loan?