BSP’s New Rules on Interest Rates Promote Transparency

August 5, 2011 By Leave a Comment

The new rules by the Bangko Sentral ng Pilipinas (BSP) (Circular No. 730, Series of 2011) that seek to promote transparency in loan prices by requiring all banks to charge interest based on the outstanding balance of a loan at the beginning of an interest period, and to quote the effective interest rates of loan products in their loan documents and marketing materials. The new rules will take into effect on 1 July 2012.

According to BSP, loan pricing transparency will protect consumers, promote healthy competition, and enable smooth and orderly functions of the entire financial system. This new policy will be applied to all institutions that offer credit in the Philippines including credit NGOs, credit cooperatives, lending investors, pawnshops, as well as banks.

To allow banks and other microfinance institutions to better understand their effective interest rates, MicroFinance Transparency has launched Transparent Pricing Initiative for the Philippines.  The aim of this initiative is to provide an opportunity for rural banks and other microfinance institutions to exchange information, standardize pricing practices and demonstrate their commitment to transparent and responsible pricing.

This opportunity allows banks to submit their data and obtain a comprehensive analysis of their effective interest rates and to graphically determine their rates in relation to other institutions in the market place.  Rural banks will clearly benefit by participating in the initiative because by doing so they will obtain access to the details of pricing of the rest of the players in the market prior to their prices being made public. With the full knowledge of the position of their products relative to others in the market, rural banks and other microfinance institutions will be able to compete effectively and fairly in the microfinance market.  This will also provide a more standardized method for clients to compare interest rates among various institutions.

Participating rural banks will enjoy other benefits by participating in the initiative as well. Banks that participate in the initiative will be certified as internationally-recognized transparent microfinance institutions by MicroFinance Transparency. They will also receive a certificate which can be displayed in their offices as well as a seal of transparency that the bank may freely use in their marketing materials and website.

For more information on this intitiative please visit the Transparent Pricing Initiative in the Philippines website.

Filed Under: Announcements, Latest Updates, MABS Reports Tagged With: , ,

Rural Banks at the Forefront of Financial Inclusion

August 5, 2011 By Leave a Comment

During his keynote speech at the Inaugural Dinner of the Rural Bankers Association of the Philippines (RBAP) last August 4, Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr recalled the journey of the two institutions in pursuance of advancing the rural banking sector and expanding financial services through innovative channels to more Filipinos.

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Filed Under: Latest Updates, MABS Reports, Microinsurance, Videos Tagged With: , , , , , ,

2011 MCPI Conference highlights collaboration for responsible microfinance

July 30, 2011 By Leave a Comment

RBAP-MABS Chief of Party John V. Owens facilitating a session on Avoiding Over-indebtedness

Rural Bankers Association of the Philippines-Microenterprise Access to Banking Services (RBAP-MABS) Program helped facilitate two sessions of the 2011 Microfinance Council of the Philippines Inc. (MCPI) Conference last July 28-29 at the Hyatt Hotel Manila. The conference themed, “Making a Difference: Multi-Stakeholder Action towards Responsible Microfinance” aims to promote responsible financial products and practices while addressing global pressing issues and challenges to microfinance.

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Filed Under: Latest Updates, MABS Reports Tagged With: , , ,

USAID/Philippines RBAP-MABS program highlighted at the ‘Mission of the Month’ event in Washington DC

April 27, 2011 By Leave a Comment

By Guest Blogger Langdon Miller

USAID/Washington designated the Philippines as its ‘Mission of the Month’ for April 2011, and highlighted the Rural Bankers Association of the Philippines – Microenterprise Access to Banking Services (RBAP-MABS) program as a project that has demonstrated impact.  During the event, the program’s success stories and lessons learned were shared with officials at the USAID headquarters in Washington, DC.

Melissa Scudo, Chemonics’ Director for Asia, presented the program’s history, work with rural banks, technical approach, and innovations in the field of microfinance.  The RBAP-MABS program supported by USAID/Philippines works with rural banks to sustainably expand microenterprise access to banking services throughout the Philippines.

A cross section of USAID personnel engaged in a lively discussion about the MABS Approach, which RBAP-MABS has been implementing to strengthen commercial microfinance services and its linkages to economic growth and poverty alleviation in Philippine rural areas.

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Filed Under: MABS Highlights, MABS Reports Tagged With:

The Pioneering Work of “Beyond Codes”

November 3, 2010 By Leave a Comment

By: ACCION International

It is easier to endorse the Client Protection Principles than to implement them. In the summer of 2008, the Center for Financial Inclusion embarked on a two-year research project to assess how financial institutions put client protection into action. This pioneering work has provided a knowledge base enabling the microfinance sector to advance from principles to practice. A final synthesis of findings was published this month in “Beyond Codes: The Foundation for Client Protection in Microfinance.”
The Beyond Codes project worked with 12 institutions, of various sizes and forms, operating in Bosnia, India, Kenya, Mexico, and the Philippines. The goal was to evaluate the institutions’ performance in client protection and develop an assessment methodology.
The report gives in-depth analysis for each principle, extracting lessons from institutions and evaluating how market forces, regulation, business norms, maturity, and internal processes affect performance.
The assessments showed that as a group, the institutions performed best on the principles of appropriate collections practices and avoiding over-indebtedness. Ethical staff behavior and transparency were principles for which some institutions excelled and others lagged. The weakest principle for the group was redress of grievances, with many MFIs having no mechanism for resolving complaints.
Overall, regulated institutions perform better than unregulated ones, possibly because the procedures required for regulated institutions have a spill-over effect on the institutions’ client protection practices. Additionally, regulated institutions tend to have better compliance, monitoring, and complaints-handling systems.
Another interesting observation is that “good client protection practices do not appear to be directly related to an institution’s mission to serve the poor.” In other words, even the organizations most dedicated to improving clients’ lives might have poor client protection practices.
The Beyond Codes research created the foundation for the Smart Campaign’s next phase, focused on implementation. By informing the Smart Campaign’s assessment methodology and tools, Beyond Codes offers actionable resources that help financial institutions turn good intentions into good practices.

It is easier to endorse the Client Protection Principles than to implement them. In the summer of 2008, the Center for Financial Inclusion embarked on a two-year research project to assess how financial institutions put client protection into action. This pioneering work has provided a knowledge base enabling the microfinance sector to advance from principles to practice. A final synthesis of findings was published this month in “Beyond Codes: The Foundation for Client Protection in Microfinance.”

The Beyond Codes project worked with 12 institutions, of various sizes and forms, operating in Bosnia, India, Kenya, Mexico, and the Philippines. The goal was to evaluate the institutions’ performance in client protection and develop an assessment methodology.

The report gives in-depth analysis for each principle, extracting lessons from institutions and evaluating how market forces, regulation, business norms, maturity, and internal processes affect performance.

[Read more...]

Filed Under: MABS Reports Tagged With: , ,
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