MABS Overview

The MABS Approach includes intensive one-on-one technical assistance, workshops, seminars, on-the-job coaching, and exposure and training visits to participant banks. Consultants from MABS Service Providers (MSPs) ensure that the training and technical assistance are being delivered properly and efficiently.

MABS at a Glance

Each participant bank receives focused attention and support, which includes the following:

• Staff Selection Guidelines 
• MIS Performance Monitoring Guidelines & Report Formats 
• Senior Management and Microfinance Unit (MFU) Staff Exposure Training 
• Annual Action Plans (in collaboration and with the support of the Participant Bank's MFU staff)
• Market Survey Report (in collaboration and with the support of the Participant Bank's MFU staff) 
• Business Plan Projections and excel spreadsheet program (in collaboration with the Participant Bank's MFU staff) 
• Micro Loan Concept Paper (in collaboration with the Participant Bank's MFU staff) 
• Operations and Procedures Manual with electronic copies (in collaboration with the Participant Bank's MFU staff) 
• MFU In-house Training Workshop, including sessions on Cashflow Lending and Zero Tolerance Towards Delinquency 
• Intensive Training for Supervisors and MFU staff 
• Quarterly Performance Monitoring and Action Plan Updates
By the end of MABS work with the client bank, the following will have occurred:
• Development or enhancement of microfinance products, practices, and procedures that follow best practice principles; 
• Implementation of a profitable microfinance line of business; 
• Implementation of a profitable microfinance line of business; 
• Development of the capacity not only to manage the microfinance operation, but to continually expand it.
The general pattern of the MABS approach is to build up and then phase out the level of dedicated technical assistance and training. 

MSP consultants work with the participating rural bank to:
• Prepare the microfinance technical assistance plan and TA package; 
• Conduct orientation sessions with management and microfinance staff; 
• Train the microfinance unit (MFU) of the bank; 
• Conduct market research in areas identified by the bank as possible target areas; 
• Identify and assess new or existing microfinance markets; 
• Review existing microfinance operating systems and procedures; 
• If applicable, assist in the development of new microfinance products and related promotion activities; 
• Create and develop the microfinance manual of operations and policy guidelines; 
• Assist the bank to launch and market their microfinance product; 
• Monitor the microfinance activities of the bank's Microfinance Unit; 
• Review product profitability and competitiveness; 
• Conduct other enhancement training for bank management and microfinance staff; 
• Monitor the performance of microfinance products, particularly those products assisted by MABS; 
• Rigorously monitor the quality of the loan portfolio and provide guidance on loan portfolio management and collections; 
• Indoctrinate within the bank management and staff a culture of "zero tolerance" for past due loans; 
• Advise the client bank about scheduled training, workshops, seminars to be attended; 
• Identify other training needs in support of the microfinance activities of the client bank; 
• Formulate a staff productivity incentive scheme; 
• Coach and guide bank management and the microfinance staff in the implementation of the MABS best practice microfinance technology.


Why MABS?

According to several surveys, approximately 20% of all households in the Philippines depend on income from microenterprises. The microenterprise sector, clearly, is a crucially important component of the Philippine economy. Microenterprises, like all enterprises, need access to quality financial services if they are to prosper and grow. Yet, for all intents and purposes, microenterprises are shut out of the formal financial sector. Because of outdated beliefs that the small size of loans demanded by the microenterprise sector makes it impossible to make money providing those loans, most banks have not been willing to provide loans to microenterprises.

As microenterprises essentially do not have access to bank loans, they are forced to rely on much more expensive sourcesof credit - e.g., moneylenders, pawn shops - for their credit needs. The very high cost of this credit makes it almost impossible for microenterprises to grow their businesses.

MABS believes that, contrary to “common knowledge,” banks can make money providing loan and deposit services to microenterprises if they “do it right.” MABS’ objective is to teach as many banks as possible to “do it right.” MABS’ hope and expectation is that, once banks realize that they can make a reasonable profit providing services to microenterprises, they will make providing services to the microenterprise sector a permanent and significant part of their business.”



Why Banks?

MABS has opted to focus its efforts on Rural Banks because several factors make Rural Banks an almost ideal vehicle for reaching the microenterprise sector.

These factors are:

• Rural Banks offer excellent geographic coverage. At present there are an estimated 1800 Rural Bank branches located throughout the Philippines, covering over 85% of all municipalities in the Philippines.

• Rural Banks are culturally and geographically close to the target market. Most Rural Bankers have personal familiarity with scores of microenterprises in their areas, and regularly use services offered by microenterprises.

• Rural Banks tend to be small, locally owned enterprises. Their size and structure usually allows for loan decisions (and other decisions) to be made quickly. There is usually no need to refer decisions to a headquarters bank in a provincial capital or in Manila.

• Rural Banks' overhead costs are usually much lower than are the overhead costs of other types of banks. This makes it more likely that they will be able to make a profit even as they carry out the large number of transactions that are associated with a microenterprise portfolio.

• Many Rural Banks are being "squeezed" as commercial banks enter markets that formerly were exclusively theirs. As such, many are very interested in exploring potential new markets - like the microenterprise market.


Program Objectives

• To assist participating rural banks and cooperative rural banks to increase the financial services they provide to the microenterprise sector;

• To provide technical assistance and training to participating rural banks to profitably and sustainably expand their loan and deposit services to microenterprises;

• To encourage technology transfer of proven Filipino and international microfinance best practices, technologies, loan pricing methods, deposit mobilization techniques, and management information systems (MIS) to assist banks in expanding their loan and deposit portfolios;

• To ensure that participating banks make microenterprise loan and deposit services a regular part of their portfolios, and that the successful example of participating banks will encourage other rural banks in the Philippines to expand their financial services to the microenterprise market.



Program Target

According to several surveys, approximately 20% of all households in the Philippines depend on income from microenterprises. The microenterprise sector, clearly, is a crucially important component of the Philippine economy.

Microenterprises, like all enterprises, need access to quality financial services if they are to prosper and grow. Yet, for all intents and purposes, microenterprises are shut out of the formal financial sector. Because of outdated beliefs that the small size of loans demanded by the microenterprise sector makes it impossible to make money providing those loans, most banks have not been willing to provide loans to microenterprises.

As microenterprises essentially do not have access to bank loans, they are forced to rely on much more expensive sources of credit - e.g., moneylenders, pawn shops - for their credit needs. The very high cost of this credit makes it almost impossible for microenterprises to grow their businesses.

MABS believes that, contrary to “common knowledge,” banks can make money providing loan and deposit services to microenterprises if they “do it right.” MABS’ objective is to teach as many banks as possible to “do it right.” MABS’ hope and expectation is that, once banks realize that they can make a reasonable profit providing services to microenterprises, they will make providing services to the microenterprise sector a permanent and significant part of their business.”

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