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BSP Reports Progress in Microfinance

06.06.2003

The Bangko Sentral ng Pilipinas reported yesterday substantial progress in the efforts to extend the reach of microfinance operations to the “poorest of the entrepreneurial poor” nationwide.

BSP Deputy Governor Alberto V. Reyes, Chairman of the BSP Microfinance Committee and whose sector also supervises BSP’s microfinance initiatives, said that as of May 2003, there were 119 banks with 363 branches that were engaged in microfinance reaching 394,613 borrowers with total loans outstanding of PhP 2,193,347,000.

In his progress report to BSP Governor Rafael B. Buenaventura, Reyes said that for the year 2002, 11 banks with 22 branches started microfinance operations in 11 provinces not previously covered by any bank with microfinance operations. He also reported that the BSP had granted rediscounting facilities to 10 banks, meaning increasing their lending capability, with total loans outstanding amounting to PhP 21,740,663.61 involving 9,623 micro-borrowers.

The BSP is mandated by Republic Act 8791, the General Banking Law, to provide the policy and regulatory framework to encourage the growth of microfinance activities. Aside from this, the BSP has adopted microfinance as its advocacy program to help the alleviation of poverty and has designated Monetary Board Member Antonino L. Alindogan, Jr. as the lead advocate and promoter of microfinance in the Monetary Board.

Microfinance is the provision of a broad range of financial services, but mainly lending without collateral to the poor to enable them to go into small businesses, hence entrepreneurial poor or “e-poor”. The loans can be as low as PhP 2,000 but not more than PhP 150,000.

Since 2001, the BSP had issued four circulars and subsequent amendments to encourage the establishment of microfinance institutions and persuade banks to go into microfinance. The objective is to provide facilities to all microfinance borrowers in all provinces.

In her first State of the Nation Address in 2001, President Gloria Macapagal-Arroyo expressed the desire to see at least 300,000 new microfinance borrowers every year.

In his report, Reyes said that as part of its advocacy effort the BSP had been meeting with foundations and big corporations to explore ways for them to invest money in microfinance. This year the BSP has also conducted three regional seminars in La Union, Cebu and Iloilo with a total of 455 participants to also encourage potential microfinance practitioners.

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