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Regulation of microfinance in the Philippines

The microfinance industry in the Philippines has grown into a $1 billion industry as of 2015. There are currently around 200 banks and 2,000 microfinance institutions (MFIs) in the Philippines servicing millions of microfinance clients. It is estimated that there are 4.24 million borrowers and 4.93 million depositors.

There is a wide range of types of microfinance institutions around the world. In the Philippines, microfinance services are provided mainly by banks (mainly rural and thrift), non-governmental organizations (NGOs), and cooperatives. 

The National Framework for regulation encompasses all types of microfinance institutions and the focus of regulation is on portfolio quality, outreach, efficient and sustainable operations, and transparent information. 

The basic premise of the framework is that all deposit-taking institutions (banks, cooperatives) are subject to prudential regulation and microfinance NGOs who collect savings greater than the compensating balance should be subject to regulation and supervision. 

Banks with microfinance operations are under the regulation and supervision of the Bangko Sentral ng Pilipinas (BSP), cooperatives are under the supervision and the regulation of the Cooperative Development Authority (CDA) and microfinance NGOs are regulated by the Securities and Exchange Commission. 

As of 2012, 154 of the more than 575 rural banks and 21 cooperative banks have microfinance operations or units. The Cooperative Development Authority reports that there are a total of 2,268 credit cooperatives and 14,406 multipurpose cooperatives are registered under their jurisdiction. 

Five hundred of the 900 registered NGOs have microfinance operations. However, lending investors and pawnbrokers are the dominant providers of credit among the formal non-bank financial institutions. Lending investors and pawnshops serve the upper tier of the microfinance market.

In 2010, an amendment to circular 694 was approved which recognizes from PhP150,001 to PhP300,000 to still be categorized as a microfinance loan. This was done to accommodate the increasing demand for higher loan amounts from growing microenterprises. This policy increased the scope of those who can be microfinance clients, consequently increasing the potential market.


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