MICROFINANCE operations in the country continued to expand in the Philippines, reflecting the country’s need for specialized financial services to lower-income individuals.
However, millions of clients still shy away from borrowing from microfinance services of banks and microfinance institutions. This despite the larger outstanding loans and client base of microfinance services as of end-2014.
During the launch of the 2015 Citi Microentrepreneurshp Awards on Friday, the Bangko Sentral ng Pilipinas (BSP) announced that thrift and rural banks’ microfinance services have an outstanding loan base of P11.4 billion as of end-2014, serving over 1.2 million microfinance clients.
With the growing value of microfinance loans and consumer base, the average loan of each borrower of microfinance services from thrift and rural banks is at P9,500 at the end of last year.
Amid the strong rise of microfinance loans in the thrift and rural banking, this is still not enough to outpace the volume of loans in other microfinance institutions outside BSP’s supervision, particularly microfinance non-governmental organizations (NGOs).
BSP Governor Amando M. Tetangco Jr. said that in 2014, microfinance NGOs, which are under the Securities and Exchange Commission’s supervision, have P11.6 billion in outstanding microfinance loans.
This is P200 million larger than the portfolio of rural and thrift banks.
Citing latest data, the BSP said microfinance NGOs serve about 2.5 million borrowers. This is 1.3 times larger in client base, compared to that of thrift and rural banks’ microfinance segment.
This puts the average loan taken out by a borrower in microfinance NGOs at P4,640, almost half of the average loan taken out by those who opt to avail themselves of microfinance services in thrift and rural banks.
The regulatory environment set up by the BSP for banks with microfinance services has been ranked by the Economist Intelligence Unit as “one of the best frameworks in the world.”
Calls have been made, however, for tighter supervision of microfinance NGOs back in 2013, particularly by the Congressional Policy and Budget Research Department, citing the risks not just to clients but also to the integrity and sustainability of the sector.
Tetangco, meanwhile, welcomed the development of microfinance NGOs, saying that their progress is helping “move the industry forward.”
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