Rizal Microbank focuses on agriculture lending

MANILA, Philippines - Rizal Microbank is planning to double its financing to the agriculture sector next year, or from P5.9 million to almost P12 million.

Maria Lourdes Pineda, president of Rizal Microbank however clarified that its agri lending portfolio will focus on the value chain rather than the actual production process.

In fact, the microfinance-oriented arm of the Rizal Commercial Banking Corp. (RCBC) has been running pilot tests in Rosario in Batangas, Davao City, Davao del Norte, and Bukidnon.

The International Finance Corp. (IFC), the private investment arm of the World Bank, has been assisting Rizal Microbank since last year.

IFC placed $150-million in equity investments to the microfinance bank to stimulate more financing to Mindanao’s agricultural input suppliers, traders, processors, post-harvest facility providers and other small agribusinesses, which create jobs and reduce poverty in some of the Philippines’ poorest regions.

The agri-related financing portfolio is small relative to the bank’s total lending portfolio but it is part of the commitment towards financial inclusion.

Total loan portfolio rose from P198 million last year to P346 million end Oct. this year.

“Since 2010, we have extended loans amounting to a total P2.2 billion from some 20,000 loans disbursed. The average loan size is P170,000,” Pineda said.

Loans are spread out to micro-borrowers and small businesses such as tricycles and sari-sari or convenience stores to the SME and missing middle to create business that gives repayment stream monthly.

Pineda said that 58 percent of its borrowers are in the wholesale and retail business, and another eight percent in services sector.

Rizal Microbank utilize microfinance account specialists (ASs) that go out in the field and manage accounts. The AS does practically everything except disburse the loans.

Loans are electronically passed through RCBC’s debit card known as MyWallet, which are given bank borrowers. That reduces the risk of fraud and theft.

To encourage borrowers to pay their loans at the branches, interest rates are lowered. In the same light, if collectors are required, interest rates are hiked a percentage point.

Meanwhile, Rizal Microbank plans to open two branches in the Visayas next year to bring its total branch network to 23. It presently operates eight full branches and two extension offices in Luzon, and another eight branches and three extension offices in Mindanao.