The Bangko Sentral ng Pilipinas (BSP) recently issued an order applicable to thrift, rural and cooperative banks expanding the range of applicants that is eligible for microcredit. Nestor Espenilla Jr, Deputy Governor of BSP, explained that there are three categories of applicants that now qualify for microfinance services: clients who already have microcredit loans, individuals who have microfinance savings deposit accounts, and low-income clients with annual family incomes below the national average (according to the National Statistics Office 2009 Family Income and Expenditure Survey, the national income average in the Philippines is PHP 206,000, equivalent to USD 4,800).
The thrift, rural and cooperative banks were cautioned against the unlawful offering of microinsurance and other insurance-related services. Banks that offer microinsurance services must be covered by an insurer that guarantees that the microinsurance products supplied by the bank are authorized by the Insurance Commission. The Insurance Commission defines a microinsurance product as “a financial product or service that meets the risk protection needs of the poor where the amount of premium, contributions, fees or charges, computed on a daily basis, does not exceed five percent of the current daily minimum wage rate for non-agricultural workers in Metro Manila and the maximum sum of premium and guaranteed benefits is not more than 500 times that [of the] daily minimum wage.” BSP warned that regulators would not hesitate to penalize bank officials found to be violating these rules.
In an effort begun in early 2010 to curtail gray-market insurance schemes, the BSP authorized 3,500 rural, thrift and cooperative banks to sell microinsurance products. Furthermore, in October 2010, regulators permitted rural and thrift banks to set up microbanking offices to help provide microfinance services in areas in which individuals would otherwise not have access to financial services.
By Hajar Elaalej, Research Associate
About Bangko Sentral ng Pilipinas (BSP): Bangko Sentral ng Pilipinas (BSP) is the central bank of the Republic of the Philippines. Established in July 1993 under the provisions of the 1987 Philippine Constitution and the New Central Bank Act of 1993, BSP took over from the Central Bank of Philippines as the country’s central monetary authority. Headquartered in Manila, BSP has three regional offices performing cash operations and eighteen branch offices. BSP participates in advocacy programs concerning microfinance, financial education and consumer protection.
Source and Additional Resources:
Gmanews.tv, June 2, 2011, “Bangko Sentral ng Pilipinas sets criteria for microfinance services”, http://www.gmanews.tv/story/222382/business/bsp-sets-criteria-for-microf…
MicroCapital.org Brief, March 15, 2011, “Philippines Looks to Curtail Direct Microfinance Lending by Government Agencies”, https://www.microcapital.org/microcapital-brief-philippines-looks-to-curt…
MicroCapital.org Brief, April 28, 2011, “ Insurance Commission of the Philippines Expects 20% of Population to be Insured by End of 2011”, https://www.microcapital.org/microcapital-brief-insurance-commission-of-t…
MicroCapital Universe Profile: Bangko Sentral ng Pilipinas (BSP), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bangko+Sentral+ng+Pilipinas+%28BSP%29%2C
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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