BSP okays uniform rules for micro-finance projects

The Bangko Sentral ng Pilipinas (BSP) has approved the uniform performance standard for micro-finance projects, aligning non-government organizations (NGOs) with the standards used on banks and quasi-banks.

The BSP said the National Credit Council (NCC) has approved the performance standards which would be used to gauge the success of micro-finance projects regardless of the supervising institution.

BSP Deputy Governor Alberto Reyes told reporters that the standardization of the performance scale was necessary to tighten the implementation of the micro-finance program.

"The difficulty in the beginning was that microfinance projects were being evaluated based on different standards," Reyes explained.

Reyes said the decision has been made to finalize and rationalize the performance standard into one that would be applicable to all micro-finance projects regardless of the implementing agency or supervising institution.

"Now there will be only one standard for such concerns as portfolio and risk evaluation," Reyes said. "Whether the project is implemented by cooperatives, NGOs or participating banks, the standards of measure will be the same. They will be comparable to each other."

Reyes said the government wanted the uniform standard to ensure that alarm bells for risky or unhealthy projects would be triggered regardless of who is implementing the project.

"These are very small, very numerous projects and the sheer size makes if very difficult to monitor," Reyes pointed out. "Some projects require daily monitoring and for a task of this magnitude, we have to be looking at them the same way using the same tools in order to clean out credit pollution."

Despite its success, Reyes said the government’s micro-finance program has also met failures. "We need to know ahead of time if certain projects are failing so that they can be addressed immediately," he said. "We don’t want all of them falling off the cliff at the same time and catching us by surprise."

Since the government started offering various incentives to banks and other financial institutions, micro-finance has grown into a P2.5-billion business involving at least 121 participating banks with over half a million borrowers.