Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, has reportedly announced that the number of microfinance borrowers in the nation rose from 932,622 to 963,717 between September 2010 and June 2011, and the total of outstanding loans increased from PHP 6.53 billion (USD 148 million) to PHP 7.14 billion (USD 164 million) during the same time period.
During this period, BSP issued several circulars reforming the microfinance sector. It issued Circular 730, which updated the rules of the Truth in Lending Act that mandates banks to use the declining balance method of calculating interest rates, which means they may not charge flat interest rates that may appear cheaper but levy interest on the full loan amount even after part of it has been paid down. In addition, BSP raised the cap on microfinance loans from PHP 150,000 (USD 3,530) to PHP 300,000 (USD 6,835) as was reported by MicroCapital in January.
As microcredit was growing in the country, the Insurance Commission (IC) of the Philippines reported an increase in the number of Filipinos buying microinsurance. According to IC Commissioner Emmanuel Dooc, approximately 3.1 million microinsurance policies were sold as of December 2011. Although this was presented as an increase, no comparable data is available for 2010. Microinsurance policies in the Philippines are defined as those offering coverage between PHP 500 (USD 11.8) and PHP 200,000 (USD 4,730). Joselito Almario, director of the Department of Finance, reportedly expects the microinsurance industry to sell 5 million policies in 2012. He also stated that the increase in policies being sold is related to the series of weather calamities in the past year that led to an increased awareness of the need for insurance policies.
The 93 microfinance institutions in the Philippines reporting data to the US-based nonprofit Microfinance Information Exchange held an aggregate gross loan portfolio of USD 632 million disbursed to 3 million borrowers as of 2010.
By Charlotte Newman, Research Associate
About Bangko Sentral ng Pilipinas
Bangko Sentral ng Pilipinas (BSP) is the central bank of the Republic of the Philippines. Established under the provisions of the New Central Bank Act of 1993, BSP is headquartered in Manila and has three regional offices performing cash operations and eighteen branch offices. BSP participates in various advocacy programs concerning microfinance, financial education and consumer protection.
Sources and Additional Resources:
BusinessWorld Online: “Reforms Boost Rank of Microfinance Clients,” http://www.bworldonline.com/content.php?section=Finance&title=Reforms-boost-ranks-of-microcredit-clients&id=44882
Manila Times: “Insurance Commission Sees More Filipinos Buying Microinsurance,” http://www.manilatimes.net/index.php/business/top-business-news/15933-insurance-commission-sees-more-filipinos-buying-microinsurance
Bangko Sentral ng Pilipinas: 2011 Circulars, http://www.bsp.gov.ph/regulations/regulations.asp?type=1&Yr=2011
MicroCapital.org story, January 25, 2012, “MICROCAPITAL BRIEF: Bangko Sentral ng Pilipinas (BSP) Repors 198 Banks Have Lent $165m to 964k Borrowers in the Philippines,” https://www.microcapital.org/microcapital-brief-bangko-sentral-ng-pilipinas-bsp-reports-198-banks-have-lent-165m-to-964k-borrowers-in-the-philippines/
MicroCapital.org story, January 18, 2012, “MICROCAPITAL BRIEF: Bangko Sentral ng Pilipinas (BSP) Doubles Microfinance Loan Ceiling to USD 6,835, BPI Globe BanKO to Provide Micro-Agri Loans to Farmers in the Philippines,” https://www.microcapital.org/microcapital-brief-bangko-sentral-ng-pilipinas-bsp-doubles-microfinance-loan-ceiling-to-usd-6835-globe-banko-to-provide-micro-agri-loans-to-farmers-in-the-philippines/
MicroCapital Universe Profile: Bankgo Sentral ng Pilipinas
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Bangko+Sentral+ng+Pilipinas+%28BSP%29
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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