Congress finalizes measure on microfinance NGOs

CONGRESS has agreed on a proposed measure that creates a regulatory body for microfinance institutions which may soon be endorsed for signing into law by the President.

Members of the House of Representatives and Senate last week met to draft one bill consolidating two separate versions that set the guidelines for nongovernment organizations (NGOs) engaged in microfinance activities.

Microfinance NGOs are defined as those non- stock, nonprofit groups that seek to extend financial aid to the poor seeking to put up small businesses.

“The poor shall be given access to appropriate financial services that are convenient, flexible, and reasonably priced including, but not limited to, credit, savings, and insurance,” the bicameral conference committee report read.

NGOs shall also provide opportunities for microenterprise development, health care, microhousing, and training and skills enhancement, as stated in the new bill.

The microfinance entities, however, are not allowed to carry out deposit- taking activities. Instead, they are to act as a net lender for member groups.

The bill directs the Securities and Exchange Commission (SEC) to put up a Microfinance NGO Regulatory Council, which will be tasked to accredit and monitor civic groups who wish to avail of the perks and incentives given by the draft law.

The council shall be made up of four government representatives from the SEC and the Trade, Finance, and Social Work departments, and three from the NGO sector.

NGOs will only pay a 2% tax on their gross receipts in lieu of