By Dennis D. Estopace
Reporter
BANK of the Philippine Islands maintains that the rates it imposes on loans by microfinance institutions (MFIs) is still better compared to loan-shark rates tapped by Filipinos in communities.
Vice president for microfinance Josias T. de la Cruz told BusinessMirror that his bank’s three-percent monthly interest and 36-percent annual interest is more attractive than five-six lending, which carries a 20-percent interest a week.
“Compute that to 52 weeks and you won’t wonder why the poor remain shackled in poverty,” de la Cruz said.
BPI’s interest rate, he explained, is also justifiable in view of the huge administrative and operational expense for managing wholesale loans.
“It’s expensive to follow-up say 200 borrowers in communities every day. The overhead to do that is really high,” de la Cruz added.
The lending rates for BPI’s wholesale loans are above industry levels of between 20 percent to 24 percent.
One program that BPI has in support of MFIs is the grant it gave to Ateneo de Manila University on Tuesday to fund the training of MFI employees and these groups’ computerization of management systems.
The BPI grant allows Ateneo, de la Cruz’s alma mater, to offer courses in microfinance for officers and staff of MFIs.
The courses is open to any MFI and would be held in five major provinces where Ateneo has a presence, de la Cruz added. The grant, he said, aims to make course fees affordable for these MFIs and would be tailored along the process.
MFIs that graduate from a course would be eligible at concessional rates, de la Cruz added.
According to de la Cruz, BPI has a minimum P200 million for wholesale loans that are re-lent to housewives at P5,000 payable in six months.
He added the amount could be increased up to P30,000 based on the record of repayment.
According to a study by World Bank-affiliated Consultative Group to Assist the Poor, microfinance programs like BPI’s which “explicitly target poorer segments of the population, generally have a greater percentage of clients from extreme-poor households.”
“Self-reported data from 2,931 MFIs collected by the Microcredit Summit suggests that a higher proportion of very poor clients are served. These institutions report that two-thirds of their collective clients fall far below the poverty line or live on less than $1 per day,” the group said in its report.
Business Mirror
August 30, 2006
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