Challenges & Opportunities in Microfinance for Rural Banks in 2010
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Challenges & Opportunities in Microfinance for Rural Banks in 2010

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

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

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    Challenges & Opportunities in Microfinance for Rural Banks in 2010 Challenges & Opportunities in Microfinance for Rural Banks in 2010 Presentation Transcript

    • Outline of Presentation  RBAP-MABS Program  Challenges Facing Rural Banks  Microfinance Opportunities in 2010  Beating the Challenges & Achieving Success
    • What is the MABS Program?
    • 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
    • Challenges Facing Rural Banks Offering Microfinance Services High Need for Growing Demanding Product Competition Operating Clients Costs Diversification
    • 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
    • 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
    • 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
    • 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
    • BSP APPROVES LARGEST CASH-IN AND CASH-OUT NETWORK Bank coordinates with GXI for AutoLoadMax Dealers to provide Cash-Out functions
    • 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
    • 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
    • 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
    • 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
    • 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  
    • 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  
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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
    • 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%  
    • Housing Microfinance Client Green Bank 1st Loan Window Grills 2nd Loan Room Partition Next Loan Room 3rd Loan Ceiling Renovation
    • 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
    • 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
    • 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
    • Microinsurance Services
    • Targeting Microinsurance Advocacy on Product Affordability Coordination with BSP & IC Supportive policies for RBs distributing microinsurance
    • Targeting Microinsurance Providing commercial insurers with relevant market information to influence more effective product development
    • Targeting Microinsurance Local Market Demand Studies conducted in rural banks CLIENT DEMAND Facilitating transitions from informal to formal microinsurance services
    • Microinsurance Services Key Products
    • 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
    • “We must become the change we want to see.” Mahatma Gandhi
    • MARAMING SALAMAT! Email: jowens@rbapmabs.org Websites: www.rbapmabs.org www.mobilephonebanking.rbap.org www.youtube.com/RBAPMABS Facebook: MABS Phil