This presentation covers the challenges & opportunities in microfinance for Philippine rural banks amidst the new regulatory environment in 2010.

2. Outline of Presentation
 RBAP-MABS Program
 Challenges Facing Rural Banks
 Microfinance Opportunities in 2010
 Beating the Challenges & Achieving
Success

3. What is the MABS Program?

5. Micro-­‐Deposit
Performance
Indicators
1998
-­‐
2009
1,600,000 2,500.0
1,458,905
1,424,111
1,400,000
1,280,994
Amt. of Micro Deposit Balance (in Millions)
2,000.0
No. of Micro Depositors Outstanding
1,170,669
1,200,000 1,930
1,831
1,688
1,000,000
1,578 1,500.0
835,469
771,799
800,000
743,659
1,104 1,000.0
600,000 523,713 982 1,002
482,488
400,000 349,459
567 500.0
541
197,146
200,000
336
482 11,601
0.1 12 171
0 0.0
1998 1999 2000 2001 2002 2003 2004 2004 2005 2006 2007 2008 2009
Amt. of Micro Deposit Balance (In Millions) No. of Micro Depositors Outstanding

6. Challenges Facing
Rural Banks
Offering
Microfinance
Services
High Need for
Growing Demanding Product
Competition Operating Clients
Costs Diversification

7. Opportunities in 2010
NEW REGULATIONS TO
SUPPORT MICROFINANCE
 Housing Microfinance Circular
 Micro Agri Circular
 Approval of Cash-in Cash-out
outlets for GCASH (virtual M
-Banking ATM network)
 Microinsurance Circular

8. Housing Microfinance (Circular 678)
PURPOSE
House Construction, House and/or Lot
acquisition, Home improvement/Repairs
LOAN AMOUNT
- Up to P300,000 for House and/or Lot
- Up to P150,000 for Home Improvement
TERMS
- Up to 15 years for house construction and
house and/or lot acquisition
- Up to 5 years for home improvement/repairs

9. Housing Microfinance (Circular 678)
INCENTIVES
 Compliance with agri-agra mandate
 Eligible for rediscounting with the BSP
 Assigned risk-weight of 0-50%
 Alternative collateral substitution allowed

10. Micro-Agri (Circular 680)
PURPOSE/TERM
- Short term purposes only of up to 12 months
ELIGIBILITY
- Clients with multiple income generation activities
LOAN AMOUNT
Up to PhP150,000
PAYMENT
- Frequent amortization (weekly/monthly)
- Up to 40% lump sum payment can be considered

11. BSP APPROVES LARGEST CASH-IN AND
CASH-OUT NETWORK
Bank coordinates with
GXI for AutoLoadMax
Dealers to provide
Cash-Out functions

12. BSP Circular on Microinsurance
 Rural and thrift banks approved to
market, sell & service microinsurance
 Opens up microinsurance as an allied
undertaking
 Rural banks have the potential to
attract and serve millions of customers

13. RBAP-MABS Helping RBs
Beat the Challenges &
Achieve Success in 2010
OACH
MA BS APPR
NS
MICRO-AGRI REVISIO
MICROINSURANCE HOUSING
SERVICES MICROFINANCE
AN MOBILE PHONE
ATI NG LO
AUTOM ATIONS BANKING
APPLIC

14. MABS APPROACH TRAINING
& TECHNICAL SERVICES
 Product Development Modular Course
 Market Research (Toolkit & Survey Forms)
 Product Development (Manuals & Procedures)
 Loan Administration & Management (Pilot)
 Operations Review
 Offered by MABS Service Providers
 Punla Sa Tao
 ARMDEV
 MICRA Philippines

15. MABS Loan Application Revisions
Objectives:
 Improve loan processing efficiency
 Updating the MABS Approach training
materials to enhance processing
efficiency
 Streamlining the forms for CIBI and
cashflow analysis

16. Automated Loan Applications &
Documentation
Manual
Loan
System
Automated
Loan

AOs
manually
prepare
System
loan
forms
 New
technology
can
 Time
consuming
automate
and
reduce
 Poten6al
for
errors
6me,
errors,
and
costs
 Incomplete
loan
forms
 Costly

17. Automated Loan Applications &
Documentation
Cost
of
PCs
for
the
field
 Netbooks
–
price
(as
low
as
9k)
 Automated
soCware
can
make
loan
processing
faster
&
more
efficient
 Loan
documenta6on
(CIBI,
cash
flow)
 Credit
scoring
 Regular
and
special
surveys

18. THE POWER OF AUTOMATION
Internet
1
Field officer gathers information on
site and sends the results to the
branch via the Internet
2
Field officer gathers information on
site then travels back to the
branch to upload the results

19. RBs Offer the Following Mobile Phone Banking Services…
Loan Payment
Payroll
Deposit
Servicing
Client
Bills Payment Withdraw
Send Money
Reload Airtime
(Remittances)
Loan Release
Microenterprise Access to Banking Services Program www.mobilephonebanking.rbap.org

20. Mobile Phone Banking
PERFORMANCE & ACCOMPLISHMENTS
 No. of Accredited Rural Bank Outlets = 886
 RBs registered over 70,000 clients & processed
over 5 Billion in GCASH transactions

21. Mobile Phone Banking
ON-GOING EVENTS
 Mobile Phone Banking Marketing Program
 Mobile Phone Banking & GCASH
Accreditation Training
 February 17 in Clark
 March 3 in Tagaytay
 March 17 in Cebu

22. Mobile Phone Banking
PLANS & FUTURE DEVELOPMENTS
 Continuing support and promotion of
SMS Alerts service for rural banks
 Support savings mobilization study
with Yale University & IPA
 To create more incentive programs to
drive volume and habituate users to
use MBanking and increase fee-based
income of the rural banks

23. Housing Microfinance
 BSP’s new circular encourages banks to
offer housing microfinance loans.
 Market analysis shows high demand for
home improvement
 Pilot tested new housing microfinance
products in 2009
 Now ready for rolling out to interested
and qualified banks

24. Housing Microfinance
Pilot Test Results
Indicator
No.
of
Branches
40
No.
of
Borrowers
Outstanding
756
Loan
PorQolio
Balance
PhP
17.3
M
Cumula6ve
No.
of
Loans
970
Disbursed
Cumula6ve
Amount
Disbursed
PhP31.2
M
PAR
30
2.19%

25. Housing Microfinance Client Green Bank
1st Loan Window Grills 2nd Loan Room Partition
Next Loan Room
3rd Loan Ceiling
Renovation

26. Housing
Microfinance Client
Cantilan Bank Client
A group loan client for 5
yrs.
Housing loan of PhP50K
leveraged P50k client has
put in to complete house
Business: sarisari store;
buy-sell seafood

27. Micro-Agri Loan
 Loan amounts based on cash flow &
capacity vs. per hectare analysis
 Regular amortization payments
 55 RB branches
 40,000 loans over PhP520 million
 17,500 small farmers reached

28. Micro-Agri Clients
Rustom Embudo, MAP client of RB Talisayan, under
the amortized-balloon payment scheme, 3rd loan
cycle, Php14,000.00 - poultry
Regerio Arreza, MAP client of Cantilan
Bank under the Amortized-Balloon
payment scheme, 7th loan cycle,
Php13,000 -rice farming
Winnie Laanan, MAP client of Valiant Bank, under
the straight amortization payment scheme, 5th
loan cycle, Php50,000 - piggery

29. Microinsurance Services

30. Targeting Microinsurance
Advocacy on
Product
Affordability
Coordination
with BSP & IC
Supportive
policies for
RBs
distributing
microinsurance

31. Targeting Microinsurance
Providing
commercial
insurers with
relevant
market
information to
influence
more effective
product
development

32. Targeting Microinsurance
Local Market
Demand
Studies
conducted in
rural banks
CLIENT
DEMAND
Facilitating
transitions from
informal to
formal
microinsurance
services

33. Microinsurance Services
Key Products

34. RBAP Partner Micro-Insurance
Providers
LIFE INSURANCE COMPANIES
Ayala Life Assurance, Inc. (now BPI PhilAm)
Country Bankers Life Insurance Corp.
PhilAm Life General Insurance Company
Philippine Prudential Life, Inc.
Pioneer Life Insurance
United Coconut Planters Life Assurance Corp. (CocoLife)
NON-LIFE and COMPOSITE COMPANIES
Malayan Insurance Company, Inc.
INTERMEDIARIES
Assistance Alliance International, Inc.
MicroEnsure Philippines

35. “We must become the
change we want to
see.”
Mahatma Gandhi

36. MARAMING
SALAMAT!
Email:
jowens@rbapmabs.org
Websites:
www.rbapmabs.org
www.mobilephonebanking.rbap.org
www.youtube.com/RBAPMABS
Facebook:
MABS Phil