Outstanding Microfinance loans rose in the first quarter from a year ago, a development that the central bank said would boost the growth of micro-enterprises in the country and speed up overall economic expansion.
Data from the Bangko Sentral ng Pilipinas showed that outstanding microfinance loans amounted to P7.3 billion as of March this year, up by 21 percent from the estimated P6 billion worth of loans at the end of last year.
BSP Deputy Governor Nestro Espenilla Jr. said last Saturday that growing the microfinance sector was part of the central bank’s overall policy of “financial inclusion,” which means widening Filipinos’ access to vital financial services, especially of the underprivileged.
“Financial inclusion is a worthy policy objective,” Espenilla said.
The outstanding microfinance loans were extended to one million borrowers and coursed through 202 banks.
There are also about 1,100 cooperatives and nongovernment organizations that provide microfinance loans.
The average microfinance loan is P8,000 per borrower.
The central bank said microfinance should be a priority strategy for helping maintain a robust growth for the economy given the large number of micro enterprises in the country.
Over 90 percent of enterprises in the country belong to the micro, small, and medium enterprise (MSME) sector, and the bulk of these are micro-enterprises.
But while microfinance is growing in the country, Espenilla said that there was a need for more banks to offer microfinance loans and services that are badly needed in the countryside.
This is why the BSP is putting in place rules and regulations to make it easier for financial institutions to provide loans and services to micro-enterprises.
One of the ways it is promoting microfinance services is by allowing banks to put up micro-banking offices (MBOs) in remote areas of the country. MBOs, which mainly service micro clients, require less capital and thus easier for banks to establish.
Espenilla noted that despite the respectable growth of the economy over the years, there are still a significant number of municipalities that do not have access to important banking services.
Data from the BSP showed that the number of banks (head offices and branches) totaled 8,870 at the end of the first quarter, up from 8,663 last year.
However, the BSP also said that about a third of the country’s municipalities—610 out of 1,634—do not have operating banks.