Microfinance loans reach P11.3 B in 2015

Microfinance loans extend- ed by Philippine banks continued to grow amid the heightened efforts of the Bangko Sentral ng Pilipinas (BSP) to develop medium and small medium enterprises (MSMEs) to help drive economic growth.

BSP Gov. Amando Tetangco Jr. said in his keynote message at the launch of the 14th Citi Micro entrepreneurship Awards overall microfinance loans surged 333 percent to P11.3 billion as of last year from P2.6 billion in 2002.

He reported the number of borrowers jumped 277 percent to 1.47 million from 390,635 as the number of banks providing microfinance loans surged 43 percent to 170 from 119.

Tetangco said the environment for the development of the microfinance sector continues to improve based on sustained coordination and cooperation with micro ent re pen eu rs, banks, microfinance institutions, agencies of government, stakeholders from civil society, the private sector as well as multilateral institutions.

“We are fully aware that we can do so much more to lift more Filipinos from poverty through microfinance. Nevertheless, we are encouraged by global surveys that indicate the Philippines has one of the world’s best environment for promoting the quality of life of people through sustained development of the microfinance sector,” he said.

Tetangco said the financial standing of microentrepreneurs continued to improve as their accumulated savings reached P4.5 billion as of endDecember.

A survey conducted by the Economist Intelligence Unit (EIU) showed the Philippines maintained its rank as the microfinance leader in Asia and the third best in the world last year.

The Philippines got a score of 81 in the Global Microscope 2015 - that assessed the regulatory environment for financial inclusion in 55 countries – making it the best in Asia.

The country also ranked third in the world next to Peru that got a score of 90 and Columbia with a score of 86. India placed fourth with a score of 71, followed by Pakistan with 64, and Chile with 62.

Tetangco said the BSP has issued guidelines on sound credit risk management practices through Circular 855 that provide an empowering approach to support small businesses.

For instance, microfinance loans and other credit accommodations not exceeding P3 million are exempted from the submission of financial documents such as Income Tax Returns (ITRs) and other supporting financial statements. Similarly exempted are start-ups during the first three years of their operation or banking relationship.

“The objective here is encourage microenterprises to build banking relationships that will help them grow for the long term,” Tetangco said.

Aftab Ahmed, chief executive officer of Citi Philippines, said the company remains committed to support microfinance in the Philippines.

“Citi’s commitment to microfinance in the Philippines is substantiated by the $ 1.5 million in grants provided over the last five years for training, rewarding, and encouraging microentrepreneurs to realize their dreams and to create more job opportunities for people in their respective communities,” Ahmed said.