BPI microfinance unit lends helping hand to OFWs

LOS BAÑOS, LAGUNA—Demosthenes Nuñez, 34, has been in the United States for over a decade.

He works two to three jobs in the service sector in casinos and hotels, with part-time jobs on the side. He said he wanted to earn big and save up fast so he could come home to the Philippines soon.

“I’m planning to open up a resort there and probably run a business franchise,” said Nuñez, whose family hails from this town.

He is one of over two million overseas Filipino workers (OFW) raring to return home.

Reintegration

“We understand that family reintegration [requires the former] OFW to sustain the livelihood and support the needs of his family. Normally, it’s not [through another] employment but with a business [in the Philippines],” said Rod Mabiasen, head of BanKo’s microenterprise loans and branch network.

“On our part, we want to help them set up their business by providing them with the capital [or] additional funding,” he said.

BanKo is Bank of the Philippine Islands’ (BPI) microfinance subsidiary that caters to small or self-employed microentrepreneurs (SEMEs).

Since its launch in 2017, BanKo has provided P3.3 billion worth of loans to 45,240 clients, most of them market stall vendors and bakeries or “sari-sari” store owners.

BPI has opened 200 BanKo branches in key areas such as the cities of Tuguegarao, Masbate, San Carlos and Koronadal, with the latest branch opened in this town on March 12. It plans to open 100 more in 2019 and expand its coverage to include vegetable farmers, Mabiasen said.

SEMEs can borrow P25,000 to P300,000, with a monthly interest rate of 2 to 2.3 percent.

One of these borrowers is Nenita Mamaril, a cassava cake vendor, who availed herself of a BanKo loan to refurbish her store in Laguna province.

‘Twice low’

“It’s almost twice lower than [the interest rates] currently offered in microfinance,” Mabiasen said, as most microlending schemes by cooperatives and nongovernmental organizations call for a 3.5 to 4.5-percent interest a month.

Most people, he said, also rely on informal lenders or loan sharks that release the money faster but also charge interest of as high as 20 percent a month. Plus, informal lending fails to provide security to lendees and do not pay government taxes.

Big risk

According to the 2017 Financial Inclusion Survey of the Bangko Sentral ng Pilipinas, 52.8 million adults, out of 68.6 million adults, are “unbanked” or do not have deposit accounts.

Simon Paterno, BanKo chair, said they wanted to promote a “culture of saving” and teach financial literacy among Filipinos.

BanKo offers collateral-free loans (up to P100,000) and require basically just government permits from the lendees.

“I think it’s better than borrowing from loan sharks who put too much interest that you don’t earn anymore [from your business],” Nuñez said.

“If [one] could earn like P20,000 a month there, I think that’s good enough than working as house helpers abroad. At least, they get to stay with their families,” he added.

Jerome Minglana, BanKo president, said BPI was so far the only local banking giant that has ventured into microlending.