Microfinance lending reached P3.3 B in Dec.

Microfinance lending reached P3.3 B in Dec.

 

The banking sector’s microfinance lending has reached P3.3 billion as of end-December last year, the Bangko Sentral ng Pilipinas said.

 

BSP Governor Amando M. Tetangco Jr. said the industry has "responded quite well" to the microfinance initiatives of the central bank. "Today there are 193 banks engaged in microfinance operations reaching over 600,000 clients with average loans of P5,500, he said.

 

Tetangco was speaking before members of the Citigroup board of judges for the Microentrepreneur of the Year Awards held at the BSP last Friday.

 

The BSP chief however reminds banks that they need to "develop alongside their clients and they should stand ready to expand the range of products and services available." This can include, among others, the operation of linkages and synergies among the microentrepreneurs that they serve.

 

At the moment Tetangco said the BSP is promoting linkages between large banks and retail financial institutions to help broaden the resource base of the micro-finance sector.

 

To further improve microfinance in the banking sector the BSP will issue guidelines on branching to expand microfinance operations and spread out its services.

 

Specifically the BSP said it would now allow banks to have a wider scope for their microfinance operations. The central bank added that it "continues to look at other issues to further develop the sector. It aims to create a policy environment that will allow banks to have a wider scope for their microfinance operations while protecting their depositors and the financial system." Microfinance is the BSP’s flagship program for poverty alleviation.

 

Under considerations now are policies and regulations covering branching and the recognition of new products for microfinance clients. "In some cases it may entail more flexible provisions, while in other cases it may entail more rigorous standards," the central bank said.

 

It is the BSP that started the risk-based approach in the supervision and examination of the microfinance sector.

 

Tetangco said earlier that there remains a "large and unmet demand for microfinance services." He added that only "commercially viable institutions are able to expand their reach to wider geographical areas and provide a more extensive range of financial services to their clients."

 

The General Banking Law of 2000 recognizes the peculiar characteristics of microfinance and established the rules and regulations for its practice within the banking sector.

 

Taking this task at hand, the BSP has also declared that microfinance will be its flagship program for poverty alleviation.

 

BSP Circular 272 of 2001 defines microfinance loans as small loans granted to the basic sectors, the poor and low-income households for their microenterprises and small businesses. A maximum principal amount of P150, 000 can be loaned out to small businesses while the lowest is P2, 500. (LCC)

 

http://www.mb.com.ph/BSNS2006052264660.html