The Bangko Sentral ng Pilipinas was lauded for its advocacy of microfinance and for its continuing support in ensuring that conventional regulatory requirements are modified to fit the needs of micro finance operations in the MicroCredit Summit Campaign +5 held in New York last November 10 – 13, 2002. Mesdames Nancy Barry, President of the Women’s World Banking, USA and Kathryn Imboden, Policy Change Manager also of Women’s World Banking, USA in their paper presented before the more than 3,000 delegates in the Summit on “Policy, Regulations And Systems That Promote Sustainable Financial Services To The Poor And The Poorest” gave credit to the BSP for its pro-microfinance policy stance in adopting a sound regulatory policy framework suited for microfinance. Specifically, they mentioned the following regulations adopted by the BSP:
- Exemption from rules on interest rates for microfinance activities, with a statement that interest rates charged on microloans should not be lower than prevailing market rates, to reflect the higher costs of making small loans, and to ensure the financial sustainability of microfinance activity.
- Government has removed itself from direct involvement in making microloans, eliminating over 100 subsidy-based, failed government microcredit programs.
- The risk on a financial institution’s microloan portfolio is no longer evaluated on the basis of collateral, but rather on the aggregate portfolio quality and track record, with no collateral required, but with rigorous portfolio quality, provisioning and loan loss reserve requirements.
- For rural, thrift, and commercial banks that desire to build microlending as part of their core business, requirements include: a vision statement expressing commitment to reach low income clients; managers and staff with experience in microfinance; at least 20 percent of the paid-up capital needs to be by persons or entities with experience in microfinance; and the operations manual needs to be consistent with the core principles of microfinance.
- Rural, development, and commercial banks that have microfinance as their principal activity are exempted from the moratorium on the establishment of new banks, and the moratorium on establishing new branches; rural banks established for microfinance are exempt from gross receipts tax for five years from license date.
More than 3,000 delegates from more than 140 countries attended the conference including heads of states and government and other dignitaries. The MicroCredit Summit Campaign +5 offered the opportunity for microcredit practitioners, advocates, donors and others committed to the Summit’s goal to assess progress, discuss challenges, and identify strategies for overcoming the challenges. It is not only committed to reaching 100 million of the world’s poorest families but to reaching and empowering women, to building institutions that are strong financially and that can continue long after donor funds have departed, and to ensuring impact—seeing to it that families are working their way out of poverty. This goal is expected to be reached by the year 2005.
As a background, in February 1997, Results Educational Fund convened the Microcredit Summit, launching the nine-year Campaign to reach 100 million of the world’s poorest families, especially the women of those families, with credit for self-employment and other financial and business services by the year 2005. This historic event, held in Washington, DC, USA brought together over 2900 attendees from 137 countries.
Continuing on the success of the 1997 Summit, the Campaign has organized a yearly Meeting of Councils, two Global meetings (1998 in New York City, USA and 1999 Abidjan, Cote d’ Ivoire) and three Regional meetings (2000 in Harare, Zimbabwe for Africa, 2001 in New Delhi, India for Asia and the Pacific and 2001 in Puebla, Mexico for Latin America and the Caribbean).