Microfinance is a key ingredient to the Philippine objective of financial inclusion, as it helps in establishing more microbusinesses and strengthens banking operations, the Bangko Sentral ng Pilipinas (BSP) chief said Wednesday.
“The availability, accessibility and affordability of microfinance have drawn more microentrepreneurs to do business with banks,” Bangko Sentral Governor Amando Tetangco Jr. said in a keynote speech at the 12th Citi Microentrepreneuship Awards in Manila.
“This is because the industry has grown from a narrow-focus on micro credit to a more holistic value added provision of financial services,” he noted.
Sixty-nine out of 183 banks has a micro credit operations with 1.7 million micro-deposit accounts. In 2012, there were only 22 banks offering microfinance.
“Developing appropriate products and delivery channels enable financial institutions to serve markets that were previously marginalized.
This is a solid foundation to build on for broader financial inclusion program,” Tetangco said.
In his speech, the central bank chief cited a survey by Europe-based Economist Intelligence Unit released last month, where the Philippines was ranked as the top country in Asia and third in the world with the most conducive environment for financial inclusion.
EIU said this is on strong leadership, highly capable regulators, optimal credit regulation and effective dispute resolution.
Tetangco noted that microfinancing was responsible for the improvement of operations and profitability of banks in this sector.
As of June 2014, BSP data showed microentrepreneurs’ outstanding loans reached P9.3 billion.
“Microfinance has become a viable proposition for banks. Microfinance, as a medium for financial inclusion, has strengthened the institutional stability of banks by generating reliable business opportunities,” Tetangco said.
The Bangko Sentral chief said financial inclusion through microfinance complements its objective towards financial stability.
“Let us continue to find more ways in microfinance to maximize benefits and opportunities we can derive from microfinance,” he said.
SOURCE: GMA News
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