Framework issued for NGOs engaged in microfinance
The Securities and Exchange Commission (SEC) has drafted a framework for non-government organizations (NGOs) engaged in microfinance operations, which includes the accreditation process for entities that will benefit from fiscal incentives.
The draft implementing rules and regulations (IRR) for the Microfinance NGO Act was released in order to seek and possibly incorporate feedback from all organizations and stakeholders in the NGO sector.
The SEC invited all interested parties to submit their comment on the draft no later than Jan. 25 this year.
Among the salient features of the IRR was the creation of the Microfinance NGO Regulatory Council, the accrediting entity that will institute a system of accreditation for microfinance NGOs. This process is crucial because duly accredited microfinance NGOs will be eligible for the preferential tax treatment of 2 percent based on their gross receipts in lieu of all national taxes. The preferential tax treatment will only apply to those catering to the poor and low-income individuals.
A microfinance NGO is defined as a non-stock, non-profit duly registered with the SEC with primary purpose of implementing a microenterprise development strategy and providing microfinance programs, products and services such as microcredit and microsavings for the poor and low-income clients.
Accredited microfinance NGOs will also be given ready access to related programs and projects of the government. Support programs include provisions for operational and capacity building grants, low interest loans and guarantee funds.
A microfinance NGO is allowed to grant loans for as low as P2,000 to a maximum of P150,000 subject to reasonable and conscionable interest rates and charges as may be agreed upon by the microfinance NGO and its debtor-client.
The Microfinance NGO Regulatory Council will be composed of four permanent members and three members from the microfinance NGO sector. The four permanent members are: the SEC chair or designated representative as chair of the council, DTI Secretary or representative, DOF Secretary or representative and DSWD Secretary or representative.
The three representatives from the microfinance NGO sector will be chosen by the permanent members of the council from among the nominees of organizations, associations, and alliances of microfinance NGOs. The members will have representatives from Luzon, Visayas and Mindanao.
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