Government employees have embraced a new lending program that disburses cash electronically, which gives thousands of people across the country access to safe and cheap financing.
State-run Land Bank of the Philippines, one of the country’s biggest financial institutions, said that outstanding loans from its paperless credit system for government workers breached P1 billion last month.
Dubbed as Mobile Loan Saver (MLS), the facility allows public employees to take out salary loans from the bank. Loan proceeds are disbursed through electronic “wallets” that are linked to employees’ mobile phone subscriptions.
“The loan take-up has exceeded our initial projections,” Landbank president Gilda Pico said in a statement.
She said that through the facility, government employees were able to enjoy low interest costs, quick loan processing turnaround time, convenience and security. This helped workers who were “grappling with high interest rates slapped by loan sharks,” she said.
It offers a low interest rate of 0.83 percent a month, or about 10 percent effective interest rate annually.
More than 2,000 loan applications have already been approved with an average loan size per borrower of P144,000. In terms of geographical location, Metro Manila residents accounted for more than half of the borrowers, followed by Luzon at 20 percent. Visayas, and Mindanao accounted for 11 percent each.