The policy environment for NGOs engaged in microfinance in the Philippines is very liberal compared to other countries. NGOs have significant freedom but are responsible to register as non-profit organizations with the Securities and Exchange Commission and state their intention to engage in microfinance. They must also file annual audited financial statements. However, NGO microfinance institutions are not subject to prudential regulation or supervision by any government authority. The liberal policies allow NGOs to collect compulsory savings from borrowers and open offices anywhere, but this lack of oversight raises questions about client protection and responsible use of savings.

1. Policy Environment for NGOs Engaged in Microfinance Microfinance Development Forum January 29, 2009 Presented by Edgardo F. Garcia Microfinance Council of the Philippines, Inc.

4. If previously registered with the SEC, NGOs are required to state in the filing of the annual General Information Sheet (GIS) that the NGO is engaged in microfinance operations.

5. File annually audited financial statements Another requirement of the SEC and the BIR:

6. NGO MFIs are not subject to prudential regulation and supervision by any government regulatory authority. As such, there is no single government agency that has a complete set of relevant information on the financial performance of NGOs engaged in microfinance.

7. PCFC and Land Bank may have some financial information on NGO MFIs that borrow from them. The Microfinance Council collects and compiles relevant financial information from NGO MFIs using the MiX Market platform. MCPI collects information from members and non-members on a voluntary basis.

9. Ideally, the total amount of compulsory savings collected by each NGO MFI should not exceed the total amount of the loans outstanding at any given time.

13. How do NGO MFIs become regulated and supervised financial institutions? They either establish or transform into financial institutions such as rural banks, thrift banks or development banks.