A NEW law that harnesses microfinance nongovernment organizations (NGOs) as a force to eradicate poverty through financial inclusion has been put into motion with the signing of the implementing rules and regulations (IRR).
The Microfinance NGOs Act aims to address poverty by supporting and working in partnership with qualified NGOs in promoting financially inclusive and pro-poor financial and credit services.
This law covers only microfinance NGOs and does not cover for-profit microfinance institutions.
Securities and Exchange Commission Teresita Herbosa, Finance Secretary Carlos Dominguez, Trade Secretary Ramon Lopez and Social Welfare Secretary Judy Taguiwalo recently signed the IRR for Republic Act No. 10693 or the Microfinance NGOs Act.
Sen. Paolo Benigno Aquino IV, Rep. Pablo Nava III as well as members of the Microfinance Council of the Philippines Inc. and APPEND Inc.—the two largest microfinance networks in the country—also attended the signing.
The newly signed IRR mandates the creation of a Microfinance NGO Regulatory Council that will serve as an accreditation body for microfinance NGOs and also institute and operationalize a system of accreditation for microfinance NGOs.
The council is mandated to set the criteria for accreditation which will include sound and measurable standards of financial performance, social performance, audit and governance.
The council is also tasked to monitor the performance of the covered NGOs to ensure their continuing compliance with the accreditation standards.
The 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 who will act as chair; the Department of Finance Secretary or representative; the Department of Trade and Industry Secretary or representative; and, the Department of Social Welfare and Development Secretary or representative.
Three members from the private sector will nominated and chosen in accordance with the rules as specified in the IRR. These representatives will serve for a term of three years and may be reappointed.
To be eligible for accreditation, a microfinance NGO must be a nonstock, nonprofit corporation with a capital contribution of at least P1 million.
It must also be operating for at least three consecutive years.