The Bangko Sentral ng Pilipinas (BSP) defines microfinance as the provision of a broad range of financial services such as deposits, loans, payment services, money transfers and insurance products to the poor and low-income households, for their microenterprises and small businesses, to enable them to raise their income levels and improve their living standards. It is also defined as the provision of financial services to low-income clients, including the self-employed.
Typical microfinance clients are low-income persons that do not have access to formal financial institutions. Microfinance clients are typically self-employed, often household-based entrepreneurs.
In rural areas, they are usually small farmers and fisherfolk as well as others who are engaged in small income-generating activities such as food processing and petty trade. In urban areas, microfinance activities are more diverse and include shopkeepers, service providers, artisans, street vendors, and others.
Financial products of microfinance used to be limited to savings and credit. Several financial services have sprung up in the past decade to address the other financial services needs of microfinance clients like insurance, remittance and even housing services.
The National Strategy for Microfinance envisions a viable and sustainable microfinancial market that will help provide poor households and microentrepreneurs with greater access to microfinancial services.
It calls for a greater role for the private sector and the non-participation of government line agencies in the provision of credit and guarantee programs. Emphasis is on the adoption of market oriented financial and credit policies to ensure viability and sustainability.
The microfinance industry in the Philippines has grown into a $1.5 billion industry as of 2016. There are currently around 200 banks and 2,000 microfinance institutions (MFIs) in the Philippines servicing millions of microfinance clients. As of 2014, there are 4.3 million borrowers and 5.1 million depositors.
It is worthy to note that the Philippines closed the gender gap in terms of financial inclusion which is largely attributed to microfinance institutions.
 BSP Circular No. 272, 30 January 2001
Salonga, Edwin, “Microfinance: An Empowerment Tool for the Enterprising Poor,” October 8, 2003.
 Frequently Asked Questions on Microfinance, Bangko Sentral ng Pilipinas website
Mix Market, Philippines Market Profile, http://www.mixmarket.org/mfi/country/Philippines
Torres, T. P. (2013, July 12). ADB cites good prospects in Phil microfinance. The Philippine Star. Retrieved from http://www.philstar.com/business/2013/07/12/964340/adb-cites-good-prospects-phl-microfinance