Allied Bank opens retail arm for microentrepreneurs

The Allied Banking Corp. (Allied Bank) has opened a retail arm to deal directly with microentrepreneurs, making the Lucio Tan-controlled bank the first commercial bank to deal directly with microentrepreneurs.

"We got the green light from our bank chairman to set aside from P600 million to P1 billion for microlending in the next five to 10 years," Peter N. Yap, Allied Bank senior vice president and head of the retail banking group, said yesterday.

Allied Bank will charge "almost" commercial rates and "encourage" automatic or complusory savings.

Through the program, Allied Bank expects to break-even or make a minimal profit as it looks toward long term benefits for the microentrepreneur, the bank’s operations, business in the micro level, and economic development.

Allied Bank has formed the microfinance department under the retail banking group.

The initial target is 250 to 300 micro-borrowers for each branch under one microfinance supervisor and two assistants.

For its wholesale microfinance activities, Allied Bank started working with the RB of Kapatagan, Green Bank, BMS Bank, First Century Bank, and the Capiz Settlers Cooperative RB.

It is also coordinating with such NGOs like Gawid Kalinga, the Microenterprise Access to Banking Services (MABS) program of the United States Agency for International Development (USAID), and the Microfinance Council of the Philippines (MFCP).

The bank is also coordinating with other government agencies such as the Small Business Guarantee Corp. (SB Corp.), and the People Credit and Finance Corp. (PCFC).

Allied Savings Bank is also into microfinance starting with its Calamba and Tanauan branches. It has 17 branches. Microfinance lending has an estimated potential of P26 billion with a mere P8.8 billion already tapped by the industry.

There are three microfinance-oriented rural banks and two microfinance-oriented thrift banks. The five banks have almost 100 percent microfinance portfolios and are reaching over 60,000 micro-borrowers.

In addition, nearly 100 rural and cooperative banks are engaged in some level of microfinance operations reaching over 350,000 micro-borrowers. As of last count, there were nealry 300 NGOs involved in microfinancing which get their funding from grants and soft loans while others tap the formal banking sector and the PCFC.

Early this year, the Bank of the Philippine Islands (BPI) launched a wholesale microfinance program through microfinance institutions (MFIs) or non-governmental organizations (NGOs).