Microfinance firms speed up approvals

THE country’s major microfinance institutions have put up bureaus nationwide to share credit information of its respective clients to fast track the approval of loan applications.

Aristotle Alip, founder and managing director of Center for Agriculture and Rural Development Mutually Reinforcing Institutions (CARDMRI), said on Tuesday that the newly setup bureaus would enable major players in the industry to determine the credit standing of its applicants that would result in faster loan approval.

“We would like to reach out to more small borrowers, and in order for us to do that, the biggest institutions among the microfinance sector agreed to share credit information of our respective borrowers,” Alip said during his speech at the Launch of the Paeng Microfinance Awards and Microfinance Data Sharing System ( Midas) at the Bangko Sentral ng Pilipinas ( BSP) on Tuesday.

Alip said that Midas would also address the issue of over indebtedness among borrowers, protect clients by reducing their default risks, and improve portfolio on microfinance to avoid client poaching.

The country’s major institutions in the microfinance industry are Taytay sa Kauswagan Inc. ( TSKI) or Bridge to Progress, OK Bank, CARD Bank, Card NGO, Negros Women for Tomorrow Foundation, Ahon sa Hirap Inc. and ASA Philippines Foundation.

These seven microfinance institutions account for 70 percent of the country’s industry with nearly one million clients with combined outstanding loans of P7 billion.

Of the total clients, around 60 percent of them were able to save for the first time in their lives with the equivalent of P3.6 billion deposited in the country’s various banking and financial institutions.

Under micro-lending, an applicant could borrow up P300,000 from the previous ceiling of P150,000, depending on his or her credit standing and ability to pay the debt with an interest rate ranging from 2 percent to 3 percent a month.

“We will never do black-listing of our debtors. We all agreed that instead of doing that we would rehabilitate our clients that have defaulted, and assist them on how they could settle their arrears,” Alip said.

Pia Roman-tayag, head of BSP’S inclusive finance advocacy staff, said that from 2001 up to October last year, some 200 banking institutions have lent a total of P38 billion to microfinance institutions.