MORE than half of Filipinos still rely on family members or friends for loans, according to official data, illustrating a financial divide that excludes a significant chunk of the population from participating in the formal economy.
Loan sharks that impose large burdens on borrowers also remain popular among Filipinos, the Bangko Sentral ng Pilipinas (BSP) said.
BSP Governor Amando M. Tetangco Jr. said this gap in financial access meant millions of people still lack sources of cash at competitive rates.
People who borrow from informal sources are often subjected to “prohibitive rates and onerous conditions,” and lack of protection against scams.
“We want our people to save, invest and know personal finance management to be financially secure and independent,” he said.
He said policymakers should work to give people options other than “informal lenders with prohibitive rates and onerous conditions.”
“And we want our people to be able to protect themselves against scams and to know their rights as financial consumers,” he said.
Latest data from the BSP showed about half or 47 percent of Filipinos borrow money. Most of those who borrow or about 62 percent turn to family members or friends for cash, while 10 percent get money from loan sharks.
Only four in 10 Filipino families save money, Tetangco said, recognizing that the inability to set aside cash was due to the fact that some people simply didn’t have the money to spare. Of those who save, 68 percent keep their money at home.
In the meantime, only 39 percent of families that receive remittances from overseas Filipino workers (OFW) have savings, while a paltry 1.8 percent of the population have insurance coverage.
Apart from low income levels, Tetangco said the financial system’s limited physical reach was also to blame for the exclusion of a large part of the population from the formal sector.
He said 12 percent of the country’s 1,634 cities and municipalities remained unserved by authorized financial service providers while 36 percent had no banks at all.
To address these gaps, the BSP started regional consultation sessions for the formation of a national strategy for financial inclusion. This framework is being drafted in cooperation with the Departments of Budget and Management, Finance, Education, Social Welfare and Development, and Trade and Industry.
Other regulators such as the Insurance Commission, the Securities and Exchange Commission, and the Philippine Deposit Insurance Corp. are also involved. Paolo G. Montecillo