Bank loans to micro-enterprises hit P7.3B

The banking industry’s growing liquidity has been benefiting micro-enterprises in the country in terms of increased lending to this sector.

This was according to the Bangko Sentral ng Pilipinas, which said the loan portfolio of banks for micro-enterprises had already breached the P7 billion mark this month.

BSP Governor Amando Tetangco Jr. reported that more than 200 banks in the country were now granting loans to micro-enterprises. He said the total outstanding loans to the micro-business sector had reached P7.3 billion, up from P6 billion as of the end of December last year.

“The growth of microfinance and non-traditional delivery channels is something we (BSP) are most proud of. The banking system is much more inclusive today,” Tetangco said.

“Inclusive” is a term used by economists to describe activities that benefit a wider range of sectors, especially those with low incomes.

The rise in loans to micro-enterprises comes with the sustained increase in the resources of the country’s banking sector.

As of end-June this year, universal and commercial, thrift and rural banks registered combined resources of P7.3 trillion, rising by 12.6 percent from P6.48 trillion as of the same period last year, data from the central bank showed.

According to the BSP, the growth was driven by the rise in deposits, which was, in turn, attributed to rising income level and confidence of the public in the banking system.

Tetangco also said the rise in loans to micro-enterprises, which were perceived to be high-risk clients, came amid improving financial standing of banks.

“It is worth noting that while other markets (overseas) are shrinking, the local banking industry is growing,” Tetangco said.

Tetangco also noted the local banking sector’s adequate capitalization and minimal exposure to bad debts.

Banks have been urged by the central bank to use more of their resources for lending, and to increase loans even to micro-enterprises.

Micro-enterprises are considered the backbone of the economy as they compose more than 90 percent of business entities in the country.

The development of the micro-enterprise sector is thus expected to significantly help boost economic growth.

To help realize the sector’s development potential, the BSP said loans should be more accessible to them.