The Bangko Sentral ng Pilipinas (BSP) is pushing a strong and technology driven microfinance sector to provide funds to entrepreneurs particularly in far-flung areas in the country.
BSP Governor Benjamin Diokno said the recently launched National Strategy for Financial Inclusion (NSFI) 2022-2028 increases focus and support to the microfinance sector as part of a whole of government approach toward a more financially included and empowered citizenry.
“Supporting the digital transformation and capacity building of microfinance institutions (MFIs) are priorities under the new NSFI. A strong and technology-driven microfinance sector can provide safe and innovative financial products to its microentrepreneur clients,” Diokno said.
Microfinance has long served the entrepreneurial poor, serving as a better alternative to “5-6” lending with its uncollateralized loans, simple requirements, fast processing, and frequent amortization.
Likewise, MFIs are among the principal drivers of last-mile financial inclusion as it is present in more than half or 57 percent of the unbanked local government units (LGUs) nationwide.
BSP data showed a total of 144 banks are engaged in microfinance, providing safe and affordable financial services to around two million borrowers, with total microfinance loan portfolio of P26 billion, while non-bank MFIs such as cooperatives assisted 8.8 million members with total outstanding loans of P288 billion.
Furthermore, microfinance non-government organization (NGOs) serve 6.2 million clients with total outstanding loans amounting to P50 billion.
“Under the new NSFI, the BSP reiterates its support for microfinance as a viable source of sustainable financing for rural communities and microenterprises, promoting greater financial inclusion,” Diokno said.