Microfinance services growing rapidly

MANILA, Philippines - Microfinance services in the country are growing at a dramatic pace as the Bangko Sentral ng Pilipinas (BSP) has reported 183 banks are providing services as of end-September 2013.

In its annual report, the BSP said these banks served over one million borrowers with an outstanding loan portfolio of P8.1 billion and savings component of P8.8 billion.

As of end-June 2013, microfinance loans stood at only P1 billion.

Microfinance is a source of financial services for entrepreneurs and small businesses lacking access to banking and related services.

Since 2002, microfinance in the banking system has grown dramatically, the BSP said.

The number of microfinance borrowers increased 191 percent to 1,138 million in 2012 from 390,635 clients in 2002.

The microfinance loan portfolio expanded from P2.6 billion in 2002 to P8.4 billion in 2012, which is equivalent to a remarkable growth of 223 percent.

From 2011 to 2012, there was sustained increase in the number of microfinance borrowers, amount of microfinance loans outstanding and savings of microfinance clients.

The BSP also noted that while regional distribution still exhibits the trend where concentration is in regions such as National Capital Region (NCR) and Calabarzon, it is interesting to note that there is an active and thriving market for microfinance for some regions where there is relatively low usage of regular banking products and services.

In 2013, the Philippines was once again recognized as first in the world in terms of its regulatory framework and practices for microfinance.

The Economist Intelligence Unit (EIU), in its annual global survey, noted that the BSP continued to promote an enabling environment for microfinance as a key advocacy to support poverty reduction.

It also cited advances in mobile access to bank accounts, the agent relationships for cross-selling of microinsurance products and the geospatial mapping currently being undertaken to account for different types of financial service access points in the country.

In the past 10 years, the BSP has issued over 40 regulations related to microfinance and financial inclusion.

Last year, the BSP with support from the World Bank, commenced preparatory work for the conduct of a baseline survey to assess Filipinos’ financial capability and literacy.

The BSP also supports the development of a formal credit market that provides adequate financing for SMEs so they can grow their businesses.