BSP reclassifies agri-loan product

The Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) has given the nod for the classification of a micro agri-loan product as a microfinance loan rather than as an agricultural loan.

The banking product was developed by the United States Agency for International Development (USAID)-supported Rural Bankers Association of the Philippines-Microenterprise Access to Banking Services (RBAP-MABS) Program.

The classification gives the micro agri-loan product the same benefits extended to other microfinance products: collateral free, cashflow and character-based lending; small and frequent amortizations; and simpler documentary requirements.

The RBAP-MABS program developed the micro agri-loan to address the microfinancing needs of small farmers and owners of agriculture-based microenterprises – segments of the microenterprise sector that were previously unserved by the microfinance programs implemented by MABS participating banks.

MABS participating banks started offering the new lending program in October 2004. By end 2005, the 20 participating rural bank branches offering this new product served 771 active borrowers, with an outstanding loan portfolio of more than P3.7 million.

The portfolio-at-risk ratio over seven days is at 0.4 percent and the ratio over 30 days is less than 0.3 percent.The RBAP-MABS Program assists rural banks to develop their capability to profitably provide banking services to microentrepreneurs.