While the Philippines is one of the world’s best regulatory environments for microfinance institutions (MFIs), there is still a need to measure the development of the sector, according to BSP Governor Amando Tetangco Jr.
Speaking before the delegates of the 2013 Microcredit Summit: Partnership Against Poverty held on Wednesday at the Philippine International Convention Center in Pasay City, the BSP governor said that the country must come up with metrics or a way to measure the progress in the area.
“To implement this commitment, we will engage various institutions in further consultations . . . to develop a national financial inclusion strategy. With a unified vision, synergy of action and complementarity of initiatives, we should make financial inclusion a reality across our country,” he added.
The BSP governor stated that giving people the access to microcredit from formal financial service providers is a winning strategy, which could empower them to get out of poverty.
However, how to reach out to the teeming millions who live in poverty is still the challenge for the country.
He said that one of the BSP’s principal thrusts is to develop a financial system that is inclusive and reaches out to the unbanked.
Tetangco noted that for 13 years, the central bank has issued over 40 policies and regulations to guide the operations of banks that have made the business decision to engage in microfinance.
“So far, so good. For five consecutive years—from 2009 to 2013—the Economist Intelligence Unit has consistently ranked the Philippine regulatory environment for microfinance. . . as one of the best in the world,” he added.
Furthermore, the BSP governor said that as of end-June 2013, there were 186 banks with microfinance operations, that are now serving over a million clients with consolidated outstanding loans of over P8 billion.
Hence, the combined savings of the banks’ microfinance clients have reached P8.9 billion, an amount surpassing their total loans.
“This tells us that these microfinance clients have attained a level of financial independence . . . from gaining access to microcredit,” he added.
Tetangco explained that the central bank’s regulatory environment also empowers banks to expand their coverage and reach out to underserved markets through scaled-down branches called micro-banking offices (MBOs), or through the e-money platform.
He added that the said regulations allow banks to increase their efficiency and lower costs, enabling them to reach markets which are otherwise not economically feasible to serve.
“Regulations also reduce the barriers for the poor to transact with banks. This addresses one of the key obstacles faced by the poor and excluded to transact with a formal financial institution,” he said.
The BSP governor noted the central bank’s Economic and Financial Learning Program, which offers a financial literacy session for microfinance clients and beneficiaries of the government’s conditional cash transfer program, many of whom are unbanked.
Mayvelin U. Caraballo