Rural Bank of Sto. Tomas and MABS-M: Adopting microfinance principles in rural banking
|
|
|
In 1998, the Rural Bank of St. Tomas (RBST) in Davao del Norte joined a USAID project known as the Microenterprise Access to Banking Services in Mindanao ( MABS-M) Program-but with some hesitation.
|
RBST was interested in the training provided by the Program on proven Filipino and international microfinance practices, which are aimed at helping banks expand their microenterprise loan and deposit portfolios.
Along with other selected banks, RBST would learn techniques for profitably providing microenterprise deposit and loan services and for making these services a regular part of their portfolio. In this way, the bank would be able to make capital available to basic but vital microenterprises such as suka or toyo production, bakeries, sari-sari stores and carinderias.
However, the MABS-M Program does require the implementation of innovative banking principles, such as zero tolerance for past due accounts, that seemed culturally impossible to put into place, according to some RBST bank officials.
But their doubts were soon replaced with confidence.
With technical assistance from MABS-M, the strategies and technologies governing microfinance were put in place in RBST during a half-year intensive training period, followed by a year of monitoring, evaluation, and further assistance.
Bank employees were provided instruction in microfinance methodologies, loan pricing methods, deposit mobilization techniques, and information management systems, all geared to assist the banks in expanding their loan and deposit portfolios. The program trained the staff in cash flow lending, for instance, to give them a better basis for evaluating accounts.
The program, a joint undertaking of the United States Agency for International Development (USAID), the Office of the President in Mindanao, and the Rural Bankers Association of the Philippines (RBAP), is geared towards building up microenterprises in Mindanao.
In December 2000, upon the completion of its two-year partnership with MABS-M, RBST had more than 500 active microenterprise borrowers, more than P3.5 million in loan portfolio, and its Portfolio at Risk Rate was below 3 percent.
RBST today considers microfinance loans as one of its major products, and is very happy with the way MABS-M principles have influenced the organization as a whole. The microfinance principles introduced by MABS-M have proven so workable that many of these have been adapted into the bank’s mainstream services and products.
Zero tolerance for past due accounts, for instance, has become a guiding principle for the bank. “For ninety percent of our commercial portfolio, we now follow the same procedures that we follow for microfinance,” says Lourdes Pineda, compliance officer of RBST.
The microfinance principles learned from MABS-M have also led to the standardization of RBST’s operating systems and procedures. Roselle Solis, president of RBST, acknowledges this: “For the first time in the bank we have prepared a product manual for our loan account. Because of this manual, our operations were standardized.”
There was also a positive corollary effect on RBST staff. “Because of the numerous training courses given to us by MABS such as cash flow lending, zero tolerance, credit investigation/background investigation, and its other seminars and exposures, our staff has acquired strong credit discipline which we are now adapting as the culture of the bank,” Solis says.
With MABS-M assistance, RBST developed its microfinance loan product called the Sariling Unlad, Kita at Impok (SUKI). It has also come up with a successful innovation known as Ganansya Box, their primary tool in attracting savings deposits. Printed on the labels of these boxes is the catchy slogan, “Piso karon, Libo puhon!”(one peso today, a thousand pesos tomorrow).
The two-year partnership with MABS-M has been fruitful for RBST. Also, by making capital accessible to small entrepreneurs in Sto. Tomas, RBST has helped raised profit and income levels for these small entrepreneurs as well as helped create jobs at the grassroots level.
Among these entrepreneur-clients is Job Flores, a balut maker who took out a loan of P16,000. Flores’ banking relationship with RBST has given him positive results: “Ningdako ang akong tindahan. Sa una duha lang ang akong nagabaligya, karon lima na sila nga nagatabang sa pag-dispose sa akong balut. (My store is bigger now. I only had two staff before, now there are five of them helping me sell my balut.)”
Another client, Celso Ala-an, a suka and toyo maker who took out a loan of P8,000, puts it succinctly. “Ang suki loan sa RBST dako kaayo ug tabang sa mga gagmay nga negosyante nga sama kanako. (The suki loan of RBST is a big help to small entrepreneurs like me.)”
The MABS-M Program provides technical services to rural banks throughout Mindanao. At this point, more than 50 banks and bank branches are participating in the Program. . Among them, these banks have provided loans to more than 16,000 microenterprises. The MABS Technical Services are now gradually being expanded to Luzon and the Visayas through the Rural Bankers Association of the Philippines. Having witnessed RBST’s success, other rural banks are bound to follow suit, guided by the most basic banking principle of all-providing service to the Filipino, and making a profit while doing so.
|
|
|
|
Events / Announcements |
|
|
| |
Downloads |
|
|
|
|
