BSP eyes 1 microfinance institution per province

The Bangko Sentral ng Pilipinas (BSP) will push for the establishment of micro-finance institutions all over the country.

Governor Rafael Buenaventura said the BSP is considering setting up a foundation which it will head and will solicit funds from multilateral and bilateral donors. Such a foundation will operate a facility to conduct trainings for both borrowers and lenders.

"Our goal is to have at least one micro-finance institution for each province. We plan to set up a specialized micro-finance branch in areas where there is economic activity and from which they could expand their businesses by borrowing from micro-finance institutions. We might also tie up with local financial institutions," Buenaventura said.

The BSP, aside from overseeing commercial banking operations, also wants to focus on providing financing to small and medium enterprises to spur economic activity especially in the countryside.

"We want this to be our contribution to poverty alleviation efforts of the government," Buenaventura said.

Recently, the BSP approved the establishment of a P100-million Micro Enterprise Bank of the Philippines (MEBP) by the International Finance Corporation (IFC), the investment arm of the World Bank.

The IFC which controls 10 percent, put up MEBP in partnership with a local bank, Planters Development Bank which is owned by businessman Jesus Tambunting who also owns the nationwide chain of Tambunting Pawnshop. Tambunting has a 40-percent stake.

The other partners are Internationale Micro Investitionen AG, a German microfinance, 20 percent; Stiching Duurzanne Ontwikkeling En Natturbescherming Postcodeloterij-Doen, a Dutch foundation for sustainable development, 20 percent; and Netherlands Development Finance Co., another Dutch firm, 10 percent.

The approval of the BSP makes MEBP, the country’s second microfinance bank with a paid up capital of P60 million.

The bank is the second microfinance bank to be developed under BSP Circular 273 issued Feb. 27 this year. The circular exempts microfinance-oriented thrift or rural banks from the general moratorium on the establishment of new banks.

Earlier this year, BSP approved the establishment of the Opportunity Microfinance Bank (OMB), the first micro-finance bank in the country.

OMB is composed of non-government organizations (NGO) that include the Alliance of Philippine Partners in Enterprise Development, Opportunity International Network, Alalay sa Kaunlaran sa Gitnang Luzon, Kabalikat Para sa Maunlad na Buhay Inc. Taytay sa Kauswagan, Inc., and Daan sa Pagunlad Inc.

OMB will grant collateral-free microfinance loans and other associated banking services to their target clients.

Reyes said micro-finance banks are better alternatives for borrowers.

"The banks will be mainly competing against informal lenders who often victimize their poor clients with usurious lending rates," Reyes said.

The banks’ target borrowers are vendors, small sari-sari stores and other small businesses which produce daily and/or weekly income and which do not require a big capital outlay.