News: Banks? microfinance loans reached P6 billion in 2007 -
05 May 2008
200805042028450.greenbills2.jpgBanks’ outstanding microfinance loans reached P6 billion in 2007, up 4.1 percent from 2006, the Bangko Sentral ng Pilipinas (BSP) said. BSP said they are "encouraged" by this growth since microfinance loans or loans to the small and medium and micro businesses are "supportive of the national agenda on poverty alleviation."BSP said that as of end-December, there were 227 banks engaged in microfinance. This number is higher than 2006’s 212 banks.
The R6 billion was extended to 839,125 borrowers last year compared to 650,104 clients in 2006. The SMEs are considered the backbone of Philippine economy since 90 percent of local businesses belong to the SME sector. SME groups said the sector would require over P30 billion in new loans in the next years to finance their expansions.
In February, to boost microfinance business, the BSP’s Monetary Board approved a new housing product for the "economically active poor."
"This program aims to improve the poor’s access to affordable shelter, secure tenure and basic services," BSP Governor Amando M. Tetangco Jr. said. The microfinance loan has no collateral requirements or collateral substitutes and it has simpler documentary requirements.
The housing microfinance loan is from P150,000 to P300,000. This is for house and lot acquisition, home improvements and house construction.
The central bank has entered into a Memorandum of Agreement with the Housing and Urban Development Coordinating Council (HUDCC) for the accreditation criteria and standards that will be applied to the banks that will offer this product. The program also includes as participants other key shelter agencies, banks, microfinance institutions and private developers.
Despite BSP’s push for banks to tap microfinancing, most big commercial banks are ignoring the call or at best, delaying plans to extend credit for smaller borrowers.