MICROCAPITAL STORY: Assets in Philippines' Rural Banking Industry Grow By 15.72%

The rural banking industry in the Philippines has grown, with assets increasing 15.72 percent in the first quarter of 2008 to P161.08 billion (USD 3.32 billion) it was reported in the Philippine Star on November 4, 2008. Assets grew by 7.78 percent from the 2007 end of P149.46 billion (USD 3.08 billion). The Rural Bankers Association of the Philippines (RBAP) predicted that the rural banking industry would continue to grow by another 15 percent for the whole of 2008, the average growth rate registered by the industry over the past five years. The RBAP has said that their member banks have reported strong growth in the third quarter. Additionally, 2008 marks the first year that rural banks have managed more than six million deposit accounts. The emphasis placed on microfinance and the agricultural industry were reported as “key” to this growth in rural banking.

John V. Owens, chief of party of Microenterprise Access to Banking Services (MABS) which has partnered with the rural banking industry in the Philippines has said that expansion in micro-lending and mobilization of small deposits are among the factors behind the industry’s strong growth. MABS is a program run and funded by the United States Agency for International Development (USAID). Owens also stated that microloan disbursement from MABS participating banks have exceeded P4.3 billion (USD 88 million) in the first nine months of 2008, noting that this is a significant expansion compared with previous years.

The Rural Bankers Association of the Philippines (RBAP) was founded in 1955, although it remained a non-incorporated association of institutions engaged in a common endeavour until 1957 when it was incorporated by the Securities and Exchange Commission. It was created to promote the general welfare and safeguard the common interests of rural bankers and to create a means for making rural bank facilities more responsive to the needs of the people in rural areas. MicroCapital has covered articles on the RBAPs partnership with Globe Telecom as well as its work with the Consultative Group to Assist the Poor.

The Microenterprise Access to Banking Services (MABS) program was created in 1998 and is an initiative which is designed to “accelerate national economic transformation” by encouraging the Philippine rural banking industry to expand access to microfinance services. Rural banks in the Philippines can apply to the MABS program, and if selected to participate will receive assistance in developing and enhancing microfinance products, the implementation of a profitable microfinance line of business and development of the capacity to manage and expand their microfinance operation.

By Lori Curtis, Research Assistant

Additional Sources:

Microenterprise Access to Banking Services: “Home“

MicroCapital Paper Wrap-Up: “Impact of Microfinance on Rural Households in the Philippines: A Case Study from the Special Evaluation Study on the Effects of Microfinance Operations on Poor Rural Households and the Status of Women, by Toshio Kondo“

MicroCapital Story: “Ayala Corporation, Bank of the Philippine Islands (BPI) and Globe Telecom Announce a New Microfinance Bank in the Philippines“

The Philippine Star: “Rural banks expand by 15.72% in H1“

Rural Bankers Association of the Philippines: “Home” “About Us“