Micro-financing has room for growth: BSP

By Mia A. Aznar

Tuesday, March 20, 2012

WITH 37 to 40 percent of municipalities in the country without banks, an official of the Bangko Sentral ng Pilipinas said there is room for more financial institutions to “reach out” to these areas in micro-financing.

Zeno Ronald Abenoja, BSP economic and financial learning director, said financial institutions have now shown interest in engaging in micro finance.

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He said micro finance services are no longer limited to rural banks and cooperatives as commercial establishments and other smaller institutions can also provide access to these services.

Abenoja said they have observed that financial institutions have become aggressive in offering micro finance products, although specializing in these are cooperative banks and micro finance institutions.

He assured that the country has enough regulatory frameworks to ensure micro-finance products being offered by licensed institutions are safe and well-managed.

“The response has been positive. We have been recognized internationally as running the best micro-financial programs,” he said.

Ranking

The Economist Intelligence Unit of London made a study on micro-finance in 54 countries in 2010 and ranked the Philippines second in having the overall best micro-finance business environment.

National Credit Council Director Joselito Almario said the country would have been first, but it was dragged down because it ranked low in its investment climate ranking. Almario explained that peace and order problems in Mindanao, issues of graft and corruption in government and poor infrastructure led to a rank of 18 in investment climate.

However, he said in a later study released in October last year, the Philippines now ranked first in overall micro-finance business environment.

As the micro finance industry has “grown significantly” in the past five years, Abenoja believes the lack of banks in some municipalities of the country allows more room to grow.

He noted that an informal survey showed that less than 20 to 30 percent of the population are deemed eligible to open a bank account and that on average, a person holds only two deposit accounts.

He said that if this is the case, the country could use more institutions that could offer micro financing.

Published in the Sun.Star Cebu newspaper on March 21, 2012.