051607: P1.4-B savings from poorest debtors

By Jun Vallecera

Reporter

NEARLY penniless people obtained financing from microlenders in 2006 aggregating to P4 billion and turned around for the better the lives of 650,100 of their members. And like true entrepreneurs, said Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr., they did not spend all of their profits in conspicuous consumption but set aside a good portion as savings. As a result, the microborrowers accumulated savings aggregating to P1.4 billion, or the equivalent of P2,000 for each one that joined the program. But still the regulators, who inherited the program from the late BSP governor Rafael Carlos B. Buenaventura, were not satisfied with last year’s outcome, saying much “remains to be done.” “Millions of Filipinos still live in poverty, without access to financial services that could empower them to better their lives. There is therefore an urgency to sustain our momentum, to bring microfinance to where it is needed the most, and thereby make a difference in uplifting the quality of life of our entrepreneurial and industrious poor,” Tetangco said in honoring the achievements of microborrowers recently. Most banks would not touch the entrepreneural poor even with a 10-foot pole fearing the attendant risks, later disproved, and nightmarish administrative issues that come with servicing their requirements. Regular bankers consider them a high-volume but low-yield market, no matter that 98 percent to 99 percent of its borrowers pay up versus the horrid repayment rate of their richer cousins. The BSP is bent on overcoming that false but popular perception of the microborrower, and just three weeks earlier the policy-making monetary board approved the classification of commercial banks’ microfinance loans to nonbank microfinance institutions as alternative compliance to the mandatory credit allocation of 6 percent to small enterprises. “This is a significant incentive for banks to provide wholesale loans that will increase the microfinance operations of retail institutions,” Tetangco said.

 

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