Banks Now Serve 1 Million Active Micro-Borrowers

Opening the 2012 National Roundtable Conference of the Rural Bankers Association of the Philippines – Microenterprise Access to Banking Services Program (RBAP-MABS) on June 7, 2012, Ms. Chuchi Fonacier, Managing Director of Bangko Sentral ng Pilipinas (BSP), cited a set of impressive statistics on how banks in the Philippines have now expanded access to microfinance services.

In her keynote address before the participants of the conference, she cited BSP data on the lending side: 190 banks with microfinance operations are reaching about one million active borrowers with an outstanding loan portfolio of PhP 7.2 billion (US$170 million). In addition to micro-loans, the BSP has been actively expanding the definition of microfinance to encourage banks to offer a broader range of inclusive financial services in the countryside.

Taking advantage of the regulations, twenty-two (22) banks have introduced micro-agri loan products to their clients; twenty-four (24) banks are offering housing microfinance; while fifty-four (54) banks have taken the initial steps for regulatory approval to offer microinsurance products to their clients. Microinsurance can be accessible through rural banks not only for microfinance borrowers but also to micro depositors and clients from low-income households. The rural banking sector is now the major provider of this broader range of microfinance services in the Philippines.

The expansion of microfinance products and services to clients has been encouraged by the enabling regulations that the BSP has put in place, especially over the past few years. At the same time, BSP regulations have equally emphasized the need to ensure greaterconsumer protection practices including financial transparency. The Monetary Board issued Circular No. 730, Series of 2011 on July 20, 2011 entitled “Updated Rules Implementing the Truth in Lending Act to Enhance Loan Transaction Transparency.” These new rules update the Truth in Lending Act, which was enacted in 1963 to promote awareness by the public of the true cost of credit.

The USAID-supported RBAP-MABS Program, now in its 15th year has provided training to more than 400 rural banks to expand their financial services.  Over 120 rural banks with more than 1,300 branches and other banking offices have provided more than PhP 42 billion (US$915 million) to 1 million clients over the past 15 years.  These banks also manage more than 1.4 million micro deposit accounts. RBAP-MABS also developed a broader range of financial products and services which are now offered by rural banks.  These include the development of micro-agri loans, housing microfinance, microinsurance, and mobile phone banking services.