The document discusses underground lending businesses operated by informal money lenders in Batasan Hills, Quezon City. It provides background on formal and informal financial institutions in the Philippines. Informal lenders, including Filipino and Indian money lenders, provide loans to small businesses and entrepreneurs through daily payment collection at nominal 20% interest rates. The study aims to understand the problems encountered by both lenders and borrowers in these underground lending operations through surveys and interviews with lenders and their clients in the community.
Project study on establishing lending businessReymar27
This document provides a feasibility study for establishing a lending business in Naujan, Oriental Mindoro. It examines the market potential, technical requirements, and financial viability of the proposed business. The study finds sufficient demand among the target market of government employees, teachers, other office workers, and pensioners. It outlines the business operations, location, equipment needs, and compliance with relevant regulations. The feasibility study concludes there is opportunity for a profitable lending business by meeting the financial needs of the local community.
This document outlines the rules and regulations for lending companies in the Philippines as established by the Lending Company Regulation Act of 2007. It delineates that lending companies will be supervised by the Securities and Exchange Commission (SEC), except those that are subsidiaries or affiliates of banks which will be regulated by the Bangko Sentral ng Pilipinas (BSP). It also specifies the types of fees lending companies must pay the SEC for things like initial registration, amendments to registration, and establishing branches. Finally, it provides details on the types of loans lending companies can offer and the information that must be disclosed to borrowers regarding loan amounts, interest rates, fees and penalties.
This document discusses marketing aspects and demand analysis for projects. It provides details on:
1) Objectives of marketing studies such as analyzing past/present demand and supply and formulating marketing programs.
2) Parts of marketing studies including market analysis and marketing planning.
3) Techniques for estimating demand like using standards, chain ratios, and market build-up methods. Historical data from various sources can be analyzed to estimate past and present demand.
4) Methods for projecting future demand including surveying intentions, needs assessments, expert opinions, time series analysis, and market testing. Proper techniques should be chosen based on available data quality and quantity.
Gicha Ressha Train (GRT) is a private firm formed in 2014 to revive railroad transportation between Manila and Dagupan, Philippines. The company aims to rehabilitate and modernize the abandoned Manila-Dagupan railroad to provide an efficient, affordable transportation option. GRT must register with various government agencies such as the SEC, DTI, BIR, SSS, PhilHealth and local municipalities. It must also obtain necessary permits and licenses to legally operate the railroad. The company will be headed by a General Manager and aims to improve mobility and connectivity across Northern Luzon through an integrated railroad system.
Topics covered are how to conform to the legal and ethical requirements of credit investigations, the difference between direct and indirect credit investigations, how to gather information, etc.
Cebu Pacific's target market is business and leisure travelers seeking an affordable and fun airline experience. It competes with Philippine Airlines and other local low-cost carriers. Cebu Pacific differentiates itself by offering the most routes, the youngest fleet, and a "Fun Flight" experience. The domestic airline market size is Php 40.41 billion, with Cebu Pacific holding a Php 19.48 billion market share. Cebu Pacific uses a low-cost approach, pricing 51% lower than Philippine Airlines to attract customers. It employs marketing strategies like promotions, advertising, and online booking to promote affordable, fun flights.
The Philippine bond market is dominated by government bonds, mainly treasury notes and bonds, though the corporate bond market has been growing rapidly in recent years. The document discusses the expansion of the Philippine local currency bond market from 2013 to the first quarter of 2018, with the government bond market growing at 12.77% annually and the faster growing corporate bond market expanding by 19.8% annually, driven by bond issuances from large banks and companies. It also outlines some challenges for transparency, regulation, and secondary market liquidity in the Philippine corporate bond market.
The key party in making a letter of credit is the issuing bank. The issuing bank formally authorizes an obligation to pay the exporter's bank during a specific period of time, assuming documented conditions have been met. It creates the letter of credit and has control over its terms.
Project study on establishing lending businessReymar27
This document provides a feasibility study for establishing a lending business in Naujan, Oriental Mindoro. It examines the market potential, technical requirements, and financial viability of the proposed business. The study finds sufficient demand among the target market of government employees, teachers, other office workers, and pensioners. It outlines the business operations, location, equipment needs, and compliance with relevant regulations. The feasibility study concludes there is opportunity for a profitable lending business by meeting the financial needs of the local community.
This document outlines the rules and regulations for lending companies in the Philippines as established by the Lending Company Regulation Act of 2007. It delineates that lending companies will be supervised by the Securities and Exchange Commission (SEC), except those that are subsidiaries or affiliates of banks which will be regulated by the Bangko Sentral ng Pilipinas (BSP). It also specifies the types of fees lending companies must pay the SEC for things like initial registration, amendments to registration, and establishing branches. Finally, it provides details on the types of loans lending companies can offer and the information that must be disclosed to borrowers regarding loan amounts, interest rates, fees and penalties.
This document discusses marketing aspects and demand analysis for projects. It provides details on:
1) Objectives of marketing studies such as analyzing past/present demand and supply and formulating marketing programs.
2) Parts of marketing studies including market analysis and marketing planning.
3) Techniques for estimating demand like using standards, chain ratios, and market build-up methods. Historical data from various sources can be analyzed to estimate past and present demand.
4) Methods for projecting future demand including surveying intentions, needs assessments, expert opinions, time series analysis, and market testing. Proper techniques should be chosen based on available data quality and quantity.
Gicha Ressha Train (GRT) is a private firm formed in 2014 to revive railroad transportation between Manila and Dagupan, Philippines. The company aims to rehabilitate and modernize the abandoned Manila-Dagupan railroad to provide an efficient, affordable transportation option. GRT must register with various government agencies such as the SEC, DTI, BIR, SSS, PhilHealth and local municipalities. It must also obtain necessary permits and licenses to legally operate the railroad. The company will be headed by a General Manager and aims to improve mobility and connectivity across Northern Luzon through an integrated railroad system.
Topics covered are how to conform to the legal and ethical requirements of credit investigations, the difference between direct and indirect credit investigations, how to gather information, etc.
Cebu Pacific's target market is business and leisure travelers seeking an affordable and fun airline experience. It competes with Philippine Airlines and other local low-cost carriers. Cebu Pacific differentiates itself by offering the most routes, the youngest fleet, and a "Fun Flight" experience. The domestic airline market size is Php 40.41 billion, with Cebu Pacific holding a Php 19.48 billion market share. Cebu Pacific uses a low-cost approach, pricing 51% lower than Philippine Airlines to attract customers. It employs marketing strategies like promotions, advertising, and online booking to promote affordable, fun flights.
The Philippine bond market is dominated by government bonds, mainly treasury notes and bonds, though the corporate bond market has been growing rapidly in recent years. The document discusses the expansion of the Philippine local currency bond market from 2013 to the first quarter of 2018, with the government bond market growing at 12.77% annually and the faster growing corporate bond market expanding by 19.8% annually, driven by bond issuances from large banks and companies. It also outlines some challenges for transparency, regulation, and secondary market liquidity in the Philippine corporate bond market.
The key party in making a letter of credit is the issuing bank. The issuing bank formally authorizes an obligation to pay the exporter's bank during a specific period of time, assuming documented conditions have been met. It creates the letter of credit and has control over its terms.
Feasibility Study: Marketing , Technical and Management AspectLena Argosino
This document provides an overview of key considerations for the marketing and technical aspects of a business plan. It discusses conducting demand analysis to identify target markets and competitors. Product description, industry profile, demand segmentation, supply analysis, and marketing strategies are covered. For technical aspects, it outlines examining the production process, equipment needs, facility requirements, capacity, and operating costs. Organization and management factors like business structure and staffing are also mentioned.
This document contains sample problems and answers related to obligations and contracts law. Some key points addressed include:
- The status of an agreement if fraud occurred during performance but not during the agreement.
- Rights of a creditor if some but not all goods owed were lost by the debtor.
- How much a joint or solidary creditor can collect from a joint or solidary debtor in different scenarios.
- Legal effects of renunciation, insolvency, compensation, novation, and other issues relating to obligations.
This document provides an overview of the case method for solving organizational problems. It discusses key aspects of analyzing a case, including defining the central issue/problem statement, considering alternative courses of action, and creating an action plan and Gantt chart. The case method involves examining various areas like strengths/weaknesses, opportunities/threats, and prioritizing problems based on their impact and importance to determine the best solution.
This document discusses key concepts regarding corporations under Philippine law. It defines a corporation as an artificial being created by law that has rights of succession and powers authorized by its charter. It also distinguishes between types of corporations like stock and non-stock, as well as domestic and foreign corporations. The roles of incorporators, corporators, stockholders and members are outlined. Finally, it notes some components of a corporation like its capacity and the activities of promoters.
This is the product proposal paper prepared by the students of Capitol University major in Marketing Management and Human Resource Management taking up Introduction to Entrepreneurship Feasibility Study paper.
The document summarizes a business plan for a snack delivery service called Snacks-To-Go. It will deliver snacks to student organizations at universities in Cebu City. The plan discusses the target market of student organizations, competitors, marketing strategy, operations, management, and financial projections. Snacks-To-Go aims to make snack provision more convenient for events by delivering orders on time. It expects demand to grow 10% annually over the next 5 years.
QSR Inc is a restaurant accelerator that provides space, resources, and support to emerging fast casual restaurant concepts to test ideas. They allow concept teams to run pop-up restaurants on their premises to collect customer feedback, sales data, and refine their concepts. In exchange, QSR Inc takes a share of revenue and potential equity in successful concepts that graduate from their accelerator program.
This document discusses the financial projections and assumptions required for a feasibility study of a new project. It provides guidelines on the key elements that should be included in financial projections such as sales forecasts, cost assumptions, profitability ratios, cash flow statements and break-even analysis. The document emphasizes that assumptions must be based on realistic and verifiable facts from industry standards, previous feasibility studies and governmental regulations to ensure the accuracy of financial projections. It also outlines the various financial statements and tools that should be used to analyze the viability, profitability, liquidity and risks of the new project.
This document summarizes key aspects of Philippine banking laws and regulations based on the New Central Bank Act (RA 7653). It outlines the primary objectives of the Bangko Sentral ng Pilipinas (BSP) which include maintaining price stability and monetary stability. It describes the roles and functions of the BSP and its Monetary Board. It also discusses the three levels of bank rehabilitation (conservatorship, receivership, and liquidation) and privileges and prohibitions for BSP personnel. Finally, it summarizes laws related to the peso as legal tender, bank deposits, and the high degree of diligence required of banks.
This document summarizes key concepts related to demand and supply analysis. It defines demand as how much of a good consumers are willing and able to buy at different prices, and supply as how much producers are willing and able to offer for sale. It describes the laws of demand and supply - that demand curves slope downward and supply curves slope upward. It discusses factors that can cause shifts in demand or supply curves and changes in equilibrium price and quantity. These include income, prices of related goods, technology, and expectations. The document also explains the effects of price floors and ceilings in creating surpluses or shortages.
A quick reference on the development of Filipino entrepreneurs by providing a conducive business environment. It also discusses mandatory allocation of credit resources.
The document provides an overview of conducting a market feasibility study. It discusses determining demand and supply, identifying the target market, and developing a sales plan. Key points include:
1) A market feasibility study assesses factors like demand, supply, market size and gaps to determine if a product can be successfully sold. It identifies the target customer groups and informs pricing, promotion and distribution strategies.
2) Estimating demand involves analyzing price sensitivity and other economic factors that influence purchasing. Supply is estimated based on production costs and factors impacting supply.
3) The target market is the specific group of customers the product is aimed at, segmented by attributes like demographics, behaviors, and location.
4)
This document summarizes key concepts related to contracts under Philippine law. It outlines the stages in the life of a contract, characteristics of contracts, types of contracts, and essential elements of a valid contract. Key points include: contracts are perfected through consent, they impose mutual obligations on parties, and they can be classified in various ways including bilateral/unilateral and consensual/real. The document also discusses capacity to contract, defects that may affect a contract's validity or enforceability, and methods of termination or perfection.
The document outlines various types and categories of cooperatives:
(1) Types of cooperatives include credit, consumers, producers, marketing, service, multipurpose, advocacy, agrarian reform, cooperative bank, dairy, education, electric, financial service, fishermen, health services, housing, insurance, transport, water service, workers, and other types determined by the Authority.
(2) Categories of cooperatives are primary (members are natural persons), secondary (members are primary cooperatives), and tertiary (members are secondary cooperatives). Cooperatives are also categorized by their territory or area of operations.
The Bangko Sentral ng Pilipinas (BSP) is the central bank of the Philippines. It was established in 1993 and enjoys fiscal and administrative autonomy. The BSP's key responsibilities include promoting price stability through monetary policy and managing financial system stability. The Philippine financial system includes universal banks, commercial banks, thrift banks, rural banks, and cooperative banks, as well as non-bank financial institutions. The BSP uses various monetary policy instruments like open market operations and reserve requirements to influence monetary conditions.
History of philippine banking ( and kinds of checks )Rexel Agapay
The history of Philippine banking began with Obras Pias, a charity foundation run by friars that became the first banking institution. Some of the earliest banks that emerged in the 19th century included Rodriguez Bank, which functioned more as a loan association, and British-Orient Bank, which expanded Philippine-European trade. HSBC established a branch in Manila in 1872. Monte de Piedad was the first mutual savings bank established in 1882 to serve the poor. The Bangko Sentral ng Pilipinas was established as the central bank of the Philippines in 1949.
1) Philippine Airlines (PAL) is the flag carrier and largest airline of the Philippines, established in 1941.
2) Over the decades, PAL has undertaken various approaches to remain competitive such as fleet modernization, expanding routes, codeshare agreements, and rebranding.
3) While being a pioneer provided name recognition for PAL, simply being first did not always translate to success due to factors like taking on too many aircraft and routes without sufficient demand. Service differentiation through amenities and brand reputation have better enabled PAL to maintain market share.
Problems encountered in selected food cart franchising business in the Unive...Clarissa Tan
This document discusses food cart franchising business in the Philippines. It provides background information on franchising and explains that a franchise involves a franchisor granting a franchisee the right to use its business model and trademarks. The document then discusses how food cart franchising has become a popular business in the Philippines, particularly near universities. It outlines the profile and roles of franchisees and franchisors. Finally, it states the purpose and scope of the study, which is to understand the problems encountered in food cart franchising businesses in university areas.
The document provides an executive summary and marketing plan for Marikina River Park in the Philippines. The park was once heavily polluted but was restored in the 1990s through a river cleaning program. It is now a 220-hectare recreational area with attractions like gardens, pagodas, and sports facilities. The plan segments the park's target markets as families, friends, budget travelers, tourists, and students. It outlines strategies to meet objectives like preventing deterioration, providing new activities, and encouraging volunteerism. The strategies include promoting the park's tagline "Maganda Rito Parati, Masaya Rito Parati" on social media with the hashtag #MRP. The plan controls marketing activities and presents the park
1. The 10-step marketing plan targets business travelers aged 35-45 from mid-level to top positions in companies. It aims to close the market gap against low-cost competitor Cebu Pacific by differentiating Philippine Airlines as a full-service premium carrier.
2. Philippine Airlines offers amenities like lounge access, business class, in-flight meals and entertainment, and a frequent flyer program. It promotes through advertising, events, online sales and partnerships.
3. Philippine Airlines serves over 30 domestic and 50 international destinations and can be booked online, through agents, or corporate accounts, with payment options like banks, stores and money remittance centers.
This document summarizes the findings of a CGAP survey of the global outreach of alternative financial institutions (AFIs), which include microfinance institutions (MFIs) as well as other institutions that aim to serve clients below the level served by commercial banks. The survey found over 750 million savings and loan accounts across AFIs globally. However, it cannot be concluded that this represents the number of poor and near-poor clients served, as the data includes clients from various economic levels and the percentage of poor vs non-poor clients is unknown. While MFIs accounted for 18% of total accounts, other AFIs like credit unions, rural banks, and postal savings banks collectively account for the large majority and also
This study analyzed the factors affecting loan repayment performances in Microfinance Institutions (MFIs) with
a case study of (Promotion of Rural Initiatives and Development Enterprises) PRIDE Arusha, Tanzania. The
study used both quantitative and qualitative techniques to investigate factors affecting loan repayment
performances. The findings show that clients’ characteristics (age, household size, gender and level of
education), nature of business (business type, business stability and income level) and loan characteristics
(repayment period, repayment mode, and repayment amount) were among the factors that influenced borrowers
in repaying their loans. Lack of business knowledge was another factor mentioned by clients which leads to low
productivity hence failure to have enough fund to repay their loans.
The study further revealed that there was a significant relationship between loan repayment performances with
clients’ businesses challenges, loan diversification to other non-income activities, and other outside factors such
market imperfections, higher interest charges, drought, among others.
Feasibility Study: Marketing , Technical and Management AspectLena Argosino
This document provides an overview of key considerations for the marketing and technical aspects of a business plan. It discusses conducting demand analysis to identify target markets and competitors. Product description, industry profile, demand segmentation, supply analysis, and marketing strategies are covered. For technical aspects, it outlines examining the production process, equipment needs, facility requirements, capacity, and operating costs. Organization and management factors like business structure and staffing are also mentioned.
This document contains sample problems and answers related to obligations and contracts law. Some key points addressed include:
- The status of an agreement if fraud occurred during performance but not during the agreement.
- Rights of a creditor if some but not all goods owed were lost by the debtor.
- How much a joint or solidary creditor can collect from a joint or solidary debtor in different scenarios.
- Legal effects of renunciation, insolvency, compensation, novation, and other issues relating to obligations.
This document provides an overview of the case method for solving organizational problems. It discusses key aspects of analyzing a case, including defining the central issue/problem statement, considering alternative courses of action, and creating an action plan and Gantt chart. The case method involves examining various areas like strengths/weaknesses, opportunities/threats, and prioritizing problems based on their impact and importance to determine the best solution.
This document discusses key concepts regarding corporations under Philippine law. It defines a corporation as an artificial being created by law that has rights of succession and powers authorized by its charter. It also distinguishes between types of corporations like stock and non-stock, as well as domestic and foreign corporations. The roles of incorporators, corporators, stockholders and members are outlined. Finally, it notes some components of a corporation like its capacity and the activities of promoters.
This is the product proposal paper prepared by the students of Capitol University major in Marketing Management and Human Resource Management taking up Introduction to Entrepreneurship Feasibility Study paper.
The document summarizes a business plan for a snack delivery service called Snacks-To-Go. It will deliver snacks to student organizations at universities in Cebu City. The plan discusses the target market of student organizations, competitors, marketing strategy, operations, management, and financial projections. Snacks-To-Go aims to make snack provision more convenient for events by delivering orders on time. It expects demand to grow 10% annually over the next 5 years.
QSR Inc is a restaurant accelerator that provides space, resources, and support to emerging fast casual restaurant concepts to test ideas. They allow concept teams to run pop-up restaurants on their premises to collect customer feedback, sales data, and refine their concepts. In exchange, QSR Inc takes a share of revenue and potential equity in successful concepts that graduate from their accelerator program.
This document discusses the financial projections and assumptions required for a feasibility study of a new project. It provides guidelines on the key elements that should be included in financial projections such as sales forecasts, cost assumptions, profitability ratios, cash flow statements and break-even analysis. The document emphasizes that assumptions must be based on realistic and verifiable facts from industry standards, previous feasibility studies and governmental regulations to ensure the accuracy of financial projections. It also outlines the various financial statements and tools that should be used to analyze the viability, profitability, liquidity and risks of the new project.
This document summarizes key aspects of Philippine banking laws and regulations based on the New Central Bank Act (RA 7653). It outlines the primary objectives of the Bangko Sentral ng Pilipinas (BSP) which include maintaining price stability and monetary stability. It describes the roles and functions of the BSP and its Monetary Board. It also discusses the three levels of bank rehabilitation (conservatorship, receivership, and liquidation) and privileges and prohibitions for BSP personnel. Finally, it summarizes laws related to the peso as legal tender, bank deposits, and the high degree of diligence required of banks.
This document summarizes key concepts related to demand and supply analysis. It defines demand as how much of a good consumers are willing and able to buy at different prices, and supply as how much producers are willing and able to offer for sale. It describes the laws of demand and supply - that demand curves slope downward and supply curves slope upward. It discusses factors that can cause shifts in demand or supply curves and changes in equilibrium price and quantity. These include income, prices of related goods, technology, and expectations. The document also explains the effects of price floors and ceilings in creating surpluses or shortages.
A quick reference on the development of Filipino entrepreneurs by providing a conducive business environment. It also discusses mandatory allocation of credit resources.
The document provides an overview of conducting a market feasibility study. It discusses determining demand and supply, identifying the target market, and developing a sales plan. Key points include:
1) A market feasibility study assesses factors like demand, supply, market size and gaps to determine if a product can be successfully sold. It identifies the target customer groups and informs pricing, promotion and distribution strategies.
2) Estimating demand involves analyzing price sensitivity and other economic factors that influence purchasing. Supply is estimated based on production costs and factors impacting supply.
3) The target market is the specific group of customers the product is aimed at, segmented by attributes like demographics, behaviors, and location.
4)
This document summarizes key concepts related to contracts under Philippine law. It outlines the stages in the life of a contract, characteristics of contracts, types of contracts, and essential elements of a valid contract. Key points include: contracts are perfected through consent, they impose mutual obligations on parties, and they can be classified in various ways including bilateral/unilateral and consensual/real. The document also discusses capacity to contract, defects that may affect a contract's validity or enforceability, and methods of termination or perfection.
The document outlines various types and categories of cooperatives:
(1) Types of cooperatives include credit, consumers, producers, marketing, service, multipurpose, advocacy, agrarian reform, cooperative bank, dairy, education, electric, financial service, fishermen, health services, housing, insurance, transport, water service, workers, and other types determined by the Authority.
(2) Categories of cooperatives are primary (members are natural persons), secondary (members are primary cooperatives), and tertiary (members are secondary cooperatives). Cooperatives are also categorized by their territory or area of operations.
The Bangko Sentral ng Pilipinas (BSP) is the central bank of the Philippines. It was established in 1993 and enjoys fiscal and administrative autonomy. The BSP's key responsibilities include promoting price stability through monetary policy and managing financial system stability. The Philippine financial system includes universal banks, commercial banks, thrift banks, rural banks, and cooperative banks, as well as non-bank financial institutions. The BSP uses various monetary policy instruments like open market operations and reserve requirements to influence monetary conditions.
History of philippine banking ( and kinds of checks )Rexel Agapay
The history of Philippine banking began with Obras Pias, a charity foundation run by friars that became the first banking institution. Some of the earliest banks that emerged in the 19th century included Rodriguez Bank, which functioned more as a loan association, and British-Orient Bank, which expanded Philippine-European trade. HSBC established a branch in Manila in 1872. Monte de Piedad was the first mutual savings bank established in 1882 to serve the poor. The Bangko Sentral ng Pilipinas was established as the central bank of the Philippines in 1949.
1) Philippine Airlines (PAL) is the flag carrier and largest airline of the Philippines, established in 1941.
2) Over the decades, PAL has undertaken various approaches to remain competitive such as fleet modernization, expanding routes, codeshare agreements, and rebranding.
3) While being a pioneer provided name recognition for PAL, simply being first did not always translate to success due to factors like taking on too many aircraft and routes without sufficient demand. Service differentiation through amenities and brand reputation have better enabled PAL to maintain market share.
Problems encountered in selected food cart franchising business in the Unive...Clarissa Tan
This document discusses food cart franchising business in the Philippines. It provides background information on franchising and explains that a franchise involves a franchisor granting a franchisee the right to use its business model and trademarks. The document then discusses how food cart franchising has become a popular business in the Philippines, particularly near universities. It outlines the profile and roles of franchisees and franchisors. Finally, it states the purpose and scope of the study, which is to understand the problems encountered in food cart franchising businesses in university areas.
The document provides an executive summary and marketing plan for Marikina River Park in the Philippines. The park was once heavily polluted but was restored in the 1990s through a river cleaning program. It is now a 220-hectare recreational area with attractions like gardens, pagodas, and sports facilities. The plan segments the park's target markets as families, friends, budget travelers, tourists, and students. It outlines strategies to meet objectives like preventing deterioration, providing new activities, and encouraging volunteerism. The strategies include promoting the park's tagline "Maganda Rito Parati, Masaya Rito Parati" on social media with the hashtag #MRP. The plan controls marketing activities and presents the park
1. The 10-step marketing plan targets business travelers aged 35-45 from mid-level to top positions in companies. It aims to close the market gap against low-cost competitor Cebu Pacific by differentiating Philippine Airlines as a full-service premium carrier.
2. Philippine Airlines offers amenities like lounge access, business class, in-flight meals and entertainment, and a frequent flyer program. It promotes through advertising, events, online sales and partnerships.
3. Philippine Airlines serves over 30 domestic and 50 international destinations and can be booked online, through agents, or corporate accounts, with payment options like banks, stores and money remittance centers.
This document summarizes the findings of a CGAP survey of the global outreach of alternative financial institutions (AFIs), which include microfinance institutions (MFIs) as well as other institutions that aim to serve clients below the level served by commercial banks. The survey found over 750 million savings and loan accounts across AFIs globally. However, it cannot be concluded that this represents the number of poor and near-poor clients served, as the data includes clients from various economic levels and the percentage of poor vs non-poor clients is unknown. While MFIs accounted for 18% of total accounts, other AFIs like credit unions, rural banks, and postal savings banks collectively account for the large majority and also
This study analyzed the factors affecting loan repayment performances in Microfinance Institutions (MFIs) with
a case study of (Promotion of Rural Initiatives and Development Enterprises) PRIDE Arusha, Tanzania. The
study used both quantitative and qualitative techniques to investigate factors affecting loan repayment
performances. The findings show that clients’ characteristics (age, household size, gender and level of
education), nature of business (business type, business stability and income level) and loan characteristics
(repayment period, repayment mode, and repayment amount) were among the factors that influenced borrowers
in repaying their loans. Lack of business knowledge was another factor mentioned by clients which leads to low
productivity hence failure to have enough fund to repay their loans.
The study further revealed that there was a significant relationship between loan repayment performances with
clients’ businesses challenges, loan diversification to other non-income activities, and other outside factors such
market imperfections, higher interest charges, drought, among others.
Unsgsa investor principles for inclusive finance how investors can contribut...Dr Lendy Spires
1) The document introduces the Investor Principles for Inclusive Finance, which provide guidance for investors to help build strong, sustainable, and responsible financial institutions that can better serve clients' needs.
2) It discusses how microfinance has helped millions but also faced challenges as the sector rapidly grew, such as over-indebtedness. The principles aim to address such issues and ensure long-term viability.
3) The first signatories of the principles are commended for their commitment to responsible finance and vision for inclusive financial systems that improve lives worldwide in a sustainable manner.
P2P lending –a “financial intermediary in social democracy” – indian scenarioPrashanth Ravada
This document discusses the emergence of peer-to-peer (P2P) lending as a new financial intermediary model in India. P2P lending platforms allow individuals and businesses to access loans at lower interest rates compared to traditional lenders. The model provides a new investment opportunity for retail investors. The document notes that India's rural and semi-urban areas are underserved by traditional banks and have high reliance on informal lending. P2P platforms could help expand access to credit for small businesses and individuals in these areas by using an online platform to efficiently connect lenders and borrowers. The document examines the role and process of P2P lending in India and how it might contribute to financial inclusion.
A project report on credit dispensation by commercial banks to the personal s...Babasab Patil
A project report on credit dispensation by commercial banks to the personal segment with special emphasis on loan against property lap By Babasab Patil
Measurement of economic and social impact of short term loans in Sub Saharan ...Soami Mabiala Stephane
Three major types of microfinance systems characterize the Western African sub-region: credit unions (“Systèmes Mutualistes”); solidarity group systems (based on the replication of the Grameen model, where what we call a Self Help Group or SHG is financed after identifying certain activities which can generate a profit), and; village-bank type systems (“Réseaux de Caisses Villageoises”)
Commercial banks are beginning to recognize microfinance as a viable market and offer financial services like loans, deposits, and money transfers to low-income households and small businesses. While banks have advantages over non-bank microfinance institutions like established infrastructure and access to deposit funding, they also face challenges in adapting traditional banking practices to the needs of poor clients. The document discusses various approaches banks can take to engage in microfinance, such as direct lending, creating a microfinance subsidiary, or partnering with existing microfinance organizations.
This document provides a table of contents for a project on microfinance and private equity investment. It outlines the objectives of studying the evolution of microfinance, business models, funding needs, and private equity deals in India. Microfinance institutions face acute funding shortages due to delayed loan repayment cycles. The research aims to understand this growing sector and investment opportunities despite challenges like over-indebtedness of borrowers. Various sources are referenced to collect data on microfinance institutions, regulations, and deals in India.
The Bangko Sentral ng Pilipinas (BSP) regulates many lending institutions in the Philippines, including thrift banks, rural banks, and pawnshops. Microfinance institutions provide financial services like loans, payments, and insurance to low-income households and are made up of credit unions, NGOs, and some commercial banks. Previously, lending companies were unregulated, leading to predatory practices, but they are now required to incorporate as financing companies. Currently, bank lending rates in the Philippines have fallen to an average of 6.34% as of July 2012, increasing demand for loans.
This document discusses the demand for savings services among microentrepreneurs and the environment needed for microfinance institutions (MFIs) to effectively mobilize savings. It notes that microentrepreneurs save for reasons like consumption, investment, social/religious purposes, retirement, and seasonal cash flow variations. For MFIs to offer savings services, they need proper licensing and regulatory oversight, deposit insurance, and sufficient institutional capacity in terms of governance, management, staff, and operations. Successfully mobilizing savings requires MFIs to understand local markets and design convenient, liquid, and secure savings products that meet client needs and preferences.
THERE ARE NO BAD BORROWER ONLY BAD LOANS.pdfRoshan Pant
Microfinance institutions face the challenge of loan delinquency and default. There are various potential causes of default, including lack of willingness to pay, diversion of funds, improper loan appraisal, economic factors, and management failures. To control delinquency, MFIs must have clear lending policies, screen borrowers carefully, monitor loans, and take swift action on problem loans. Strategies include rescheduling loans, legal action, community pressure, and writing off uncollectible loans. Regulators must also monitor MFIs to ensure safety and mitigate risks.
This document discusses financial inclusion in the Middle East and Saudi Arabia. It defines financial inclusion as access to affordable and usable financial services. The importance of financial inclusion is discussed, including its role in job creation, poverty alleviation, and boosting incomes. While financial inclusion can help the poor and small businesses, the literature suggests governments in the Middle East are not doing enough to increase uptake of financial services through education campaigns. The document will examine prevalence of banking, loans, and mobile banking in Saudi Arabia in 2017.
The document discusses the history and impact of microfinance, specifically the Grameen Bank founded by Muhammad Yunus in Bangladesh. It notes that traditional banks often exclude the poor due to lack of collateral and perceived repayment risk. The Grameen Bank pioneered an innovative group lending model where loans are provided to groups of borrowers who are jointly liable for repayment, incentivizing monitoring and reducing costs. This model has enabled over 5 million poor Bangladeshis, especially women, to access credit and engage in entrepreneurship. The success of the Grameen Bank in alleviating poverty demonstrates that traditional perceptions of lending to the poor may be outdated.
1. The document discusses opening savings accounts by meeting customers for a project at HDFC Bank. It describes the process of recruiting and training sales executives to generate business by using their personal contacts to convince customers to open accounts.
2. It then provides an overview of the banking industry and HDFC Bank, describing their role in economic development and how they provide various financial products and services.
3. The importance of sales executives for generating business by meeting customers and converting them into real customers is emphasized.
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The document provides an overview of auditing the business process outsourcing (BPO) industry. It discusses the nature and background of the BPO industry, including how BPO works and the different types of services BPO companies provide. It notes that BPO remains a strong trend and accounts for 10-15% of the global BPO market, with the Philippines consistently ranking among the top destinations. The document outlines the objectives of understanding the specialized industry, learning Philippine statistics and updates, and identifying audit considerations.
Effects of micro- finance institutions' services on sustainability of small e...inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
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Constraints to the Development of Microfinance Sector in PakistanAyesha Majid
The Growth rate of Pakistan’s Microfinance Sector is not as high as expected. The anticipation was rise in sector growth once it enters the growth stage from the introductory stage but this has failed to happen. The paper aims to look at the reasons because of which the formal sector has growth rate lower then what international agencies like ADB and the federal government expected. For this 10 year data of the sector has been analysed from start of growth period in 2007 to 2016. The main constraints faced by the sector are access, sustainability, innovation, efficiency and risk management.
This study examines the current environment of financial market in Pakistan against the contextual history of sustained fundamental limitations that refrain the sector’s growth.
Similar to underground lending business in the Barangay Batasan Hills, Q.C. (20)
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OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
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South Dakota State University degree offer diploma Transcriptynfqplhm
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3. Finance is a branch of economics’ concerned with resource allocation as well as resource management, acquisition and investment. Simply, finance deals with matters related to money and the market (www. Dictionary.com). Finance is the crucial aspect of any economic development in the world. It affects every individual in the society. The financial system operates in an environments were economic and social conditions were affected its performance (Tomy Thalachirakuxchy). As a developing country, the Philippines have a large informal sector as comprised of micro-enterprises. Many of these are severely resource-constrained small scale retailers or neighborhood store owners, market vendors and many other/ including night time workers in karaoke bars, whose survival in the business relies heavily on access to financing. This usually comes from the informal sector as well in the form of informal financiers, called “5-6” lending business. There are two types of “5-6” financiers are commonly found in such Barangays, each with a distinctive lending mechanism, Filipinos and Indian lenders. This study will give central attention to Indian financier for some several reasons. First they are considered “last resource Lenders”, because they are mostly crucial to the marginalized micro-entrepreneurs sources (Mari Kondo). Second, Indian financier exist because there is a strong demand for them (Magsaysay-2006).
4. The financial institution can be classified into formal and informal institutions. Formal institutions are those objectives and functions are defined and based on government laws, policies, even the rules and regulations. Example of this is banks, lending association (www.yahoo.com). The informal institution, is engaged in the business whose that come under the direct preview of the government. Examples are the Filipino and the Indian Lenders (www.google.com). The Central Bank of the Philippines is the major agency that is responsible for monitoring, regulating and oversees the operations of the country’s financial system. It is the power machinery for economic and social development (Tomy Thalachirakuxchy). Informal money lenders, both Filipinos and Indians provide loans mostly to the consumers and small time entrepreneurs. These informal institutions group normally no formal officers, office and other similar facilities like formal institutions. This is known as “5-6” among their clients and communities dependent on them. This informal money lender plays an important role in channeling credit to small borrowers in the urban as well as rural areas of the Philippines.
5. The Five-Six Money Lenders so-called because of the manner in which they lend, “5-6” money lenders charge a nominal interest rate of 20% over an agreed period of time. A person who borrows 5 pesos from a “5-6”over a period of one week repays 6 pesos, including 1 peso interest. Neither Filipino nor Indians “5-6” money lenders require collateral or documents from their borrowers. The success of the borrower’s business and loan repayment history provide a gauge of the borrower’s credibility. Five-Six money lenders undertake daily collections of payment in the morning, afternoon or both. A client’s daily payment is determined by the sum of the principal borrowed plus its 20% nominal interest divided by the credit term. The loan arrangement is flexible; if the clients fails to pay one day, it is understood that he or she will pay for the day missed the next time around( Mari Kondo). Renewal of loans depends on the money lenders policy. Some “5-6” money lenders will renew clients only after the previous loan is paid in full. More accommodating lenders will renew a client’s loan earlier, subtracting the outstanding balance of the old loan from the new loan and issuing the client the remainder. The favored clients of informal money lenders are proprietors of small businesses (such as market vendors, small scale retailer and small service providers). A key success factor for “5-6” business is the development of a large, good- quality client base which continually borrows and repays without default.
6. SCOPE AND LIMITATION An informal money lender is a vast subject and its operations how existed from time immemorial, the researcher limited the study on informal money lenders, its client which are informal sectors who reside and operate in the Barangay. Though informal money lender in the Philippines and us seem all over the Philippines. The researchers this study only to the Barangay Batasan Hills Quezon City. This study concentrated only in money lenders and money borrowing. These money lenders are mostly the so called five-six and the borrowers are mostly the informal sectors within the Barangay who operate in the vicinity. The scope of the study is limited to the lenders operating practices and problems encountered with their operation with respect to the informal sectors of the Barangay and their borrowing practices.
7. SIGNIFICANCE OF THE STUDY This study aims to focus on the informal lenders in the Philippines. How can they affect small enterprises, market vendors and store owners and even such individuals. The economic and social growth of any country depends on an effective financial system it is responsible for financing vital programs and projects that promote and accelerate social and economic development. This study will be useful to the Central Bank of the Philippines to knowing the informal financial institutions procure with, how they to operate this kind of institutions and what are their formalities. These study are useful the of Bureau of Internal Revenue (BIR) and Municipalities because they controlled and protect the illegal informal institutions. Such things are ignored because they had an “under the table” process to not report this kind transaction. Department of Trade and Industry to know the management practice s of these informal financial institutions for regulation papers. More over it will be helpful for the formal financial institutions to be diligent thus reducing their defaults. Further the modusoperandi of these money lenders in terms of their operational and debt collections could be a source of additional information. This study will also help the entrepreneur to know how these informal financial institutions are managing their business. This study will likewise be also useful to the student academe and researcher who wants to conduct further studies on the informal financial money lenders and their contribution and effects to the economy.
8. DEFINITON OF THE TERMS Formal finance -a financial institution with well defined structures objectives and functions and based on government laws and policies. Informal finance -an establishment of unlicensed money-lenders does operate without the requirements and documents before to start the business. Informal -money lenders they are not licensed to accept from the public such are coincident illegal because they charge very high interest. Credit -confidence in a purchaser’s ability and intention to pay without immediately payments displayed by entrusting the buyer with goods or services. Underground economy- refers to the part of the economy that generates income, but goes untaxed. It is a part of the lender who earns profit and money bur goes untaxed. Underground- business that operates illegally.
15. SPECIFIC PROBLEM Specifically it sought to answer the following sub problems. What is the demographic profile of the respondents in terms of the following variables? 1.1 Age 1.2 Gender 1.3 Civil Status 1.4 Years in business 1.5 Sources of Loans 1.6 Sources of Initial Capital 1.7 Prefer to ask for a Loan 1.8 Higher in interest rate 1.9 Initial & Present Capital What is the demographic profile of the money lenders in terms of the following variables? Age Gender Civil Status Years of business From whom trade learned Size of clients Sources of funds 2. How do the respondents rate the problems in terms of:
16. 2.1 Internal Environment a. Money lenders prefer women as a potential borrower b. Difficulty in paying the informal money lenders c. Difficulty in the renewal of another loan from a Indian money lenders d. Difficulty in the renewal of another loan from Filipino money lenders e. Most convenient to ask a loan - Informal money lenders - Formal institutions (ex. Banks) f. Prefer mostly by the respondent to ask for a loan - Informal money lenders - Formal institutions (ex. Banks) g. Turning of the respondent into the informal money lenders after failing to get a loan from the banks, relatives, friends and other. h. Important to know the rights and responsibilities i. Indian as a moneylender j. Filipino as moneylender
17. 2.2 External Environment a) Respondent action by the Barangay Batasan Hills on underground lending business. b) Formal Institution threatened o informal money lenders. c) Effect of underground lending business on our economy. d) Imposing of taxes by the government on the informal money lenders. e) Money lending exists because there is a strong demand for them. 3. Is there any significant differences as how the respondents rate the informal money lenders against the formal institutions on which they prefer to ask for a loan. 4. What alternative course of action is necessarily to address the problems encountered as perceived by the respondents?
18. a) They will register with the barangay from which they were conducting and operating their business. b) Imposing taxes on the informal money lender. c) Registration of their money lenders business. d) Conducting seminars on the barangay by the money lenders within the community on how to earn profit from money lending.
21. LOCAL LITERATURE Various attempts have been made by the Reserve Bank of India (RBI) - to regulate and bring into its preview, the functioning of money lenders and indigenous bankers. Recommendations from RBI that detailed accounting styles, rediscounting and deposit taking functions, support by commercial banks etc. were not accepted by associations and unions of lenders, disagreeing with some of the provisions made by RBI [Sundharam, 1996: 5.23-5.27]. Money Lenders in India come under control of the Money Lenders Act, promulgated by each of the different states. The Act essentially sets out the appointment of a Registrar-General of Money-Lenders who maintains a Register of Money-lenders in their jurisdiction. The Registrar provides for a license to money lenders to carry out their business, regulates the terms and conditions under which a loan is provided to borrowers, and arbitrates in disputes between money-lenders and borrowers in cases of default or other aspects. Compliance with the Act is rare however, and majority of the money-lenders do not obtain such a license to operate.
22. According to Feliciano R. Fajardo, “In general informal money lenders charged much higher interest rates than banks and other lending institutions. Those of them who charged very high interest rates are called ‘’usurers or loan sharks” their victims are always the poor people who are not qualified to borrow from banks according to him there are two kinds of financial institutions. They are formal financial institution and informal financial institution. The formal financial institution are licensed lenders, examples are banks etc. the informal financial institutions are unlicensed money lenders, who charged much higher interest rates.
23. In Depth by Manny Canto In Negros Opinion. On his article he states that “ it is an open secret that these Indian Nationals are doing business all over the Philippines and their business is within the ambit of economy. According to his research “Underground Economy: refers to the part of the economy that generates income, but goes untaxed.
24. Sun Star, Cebu by Godofredo M. Roperos On taxing “5-6” lenders. He states that “money lending among those whom the banks, would never extend a loan to, and those who believe borrowings from the banks is a lot of paper work and red tape, is a highly lucrative business operation, able it a lot of hard work, sacrifice and patience. Interest, I think it is well worth their sacrifice and patience. This kind of lending that is all over the rural areas is operated only by the so- called “Bombay” or the Indian Nationals.
25. Press Release by Alliance of Volunteer Educators (AVE). a party-list representative states that there is need for the money-lending sector to come up with a one-stop for a small-medium entrepreneurs to avert further proliferation of the so called ”5-6” lending business. AVERep. Eulogio “amang Magsaysay” said that the rising number of people engaged in money lending in the country is a positive indicator that the so-called “underground economy” is thriving. He also states that the illegal money lenders exorbitant interest rates, don’t pay taxes to the government and violate trade rules. That the money lenders exist because there is a strong demand for them.
26. Maro Kondo on his article on “The Bombay 5-6”. Last Resource Informal Financiers for Pilipino Micro-Enterprises states that she considers the implications of having different financiers contribute to the development of micro-enterprises. She gives central attention to the Indian Financiers for they are regarded as last resource lenders, that their group is crucial to the most marginalized micro-enterprises and a part of their lending money flows in from Indian through informal channels, guide an interesting phenomenon in this part of the world.
27. Foreign Literature The Great Greek Philosopher Aristotle has openly expressed his opposition against Money Lending on interest. He says: ‘’Money maybe a useful instrument of exchange but when it tempts people to pile up unused gains or accumulate wealth by lending money, it is sterile or unproductive and it promotes disparity in riches and financial irregularities. A Nigrian Nationals named I A. H Ekpo and O.J Umin on their writings in “The Informal Sector”. They states that in Nigerian there are also informal money lenders, saving and credit associations and credit unions. Money lenders are believed to be highly exploitative with high rates of interest through which they extract economic surplus provided by peasant labour, capital and land. The savings and credit associations as well as credit unions operate in more formalized ways than the esusu associations.
28. Article On Women and Informal Credit: Lessons from Morotele, South Africa report by M. Kongolo that on The Majority of women in South Africa’s developing areas still have no access to formal credit and inputs. Informal credit is part of the economy in which financial transactions that take place are not officially regulated or monitored; however it should not be dismissed as unimportant system. According to Eugene Mutura in Kigali on her write up about informal money lending, he states that “this illegal money lending has high side effects because it affects property and individual’s security as well as crippling the nation’s economy”.
29. In United Kingdom (UK) Loan Sharks with are normally unlicensed money lenders will offer loan to those who need cash. However, there is always a major catch-how much has to be paid back. The terms on offer will usually be very poor. There are many cases of people borrowing small sum and paying double, a loan shark is a person or triples that original sum in interest. By definition, a loan shark is a person or body that offers illegal unsecured loans at high interest rate to individuals, often backed by blackmail or threats of violence. A loan shark is an unlicensed money lender who provides credit to those who are unable to obtain credit from a legitimate financial organization. As the population continuously on growing still there is a informal money lenders in every area, in every places in the Philippines. Their numbers has still growing until nowadays.
30. Foreign Studies Credit/Importanceof Credit-confidence in a purchaser’s ability and intention to pay without immediately payments displayed by entrusting the buyer with goods or services. According to the Asia Development Outlook “Informal money lenders can be Categorized into four divisions: Intermittent Lenders, United Credits, tied Credit and Group finance (Tomy Thalachirazkuchy).
31. FIJI Daily post news on Money Lending (2009) It is a result study commissioned by the Consumer Council and the FIJI institute of Applied Studies (FIAS), found among other things, that there was a relatively significant demand for credit by urban and pre-urban households that commercials banks could not satisfy for many reasons, which includes the lack of collateral.
32. According to the Doctor Ganesh Chand a director of FIJI Institute of Technology, he conducted a study and states found out that there is a relatively significant demand for credit by urban and per-urban households that commercial banks cannot satisfy for numerous reasons, with includes the lack of collateral. The study observed that people were turning to moneylenders after failing to get a loan from banks, relatives. Friends and other sources. Doctor Ganesh Chand conducted a interview regarding on money lending. According to him “Repeat borrowing is a major feature of money lending industry in FIJI. This occurs largely for short-term borrowers who promise to pay at the next pay day whether this be weekly, fortnightly or monthly. Reasons given for borrowing. Money were investment, daily family needs, bill payment, children’s education purposes, special occasions, pocket expenses, drinking, socializing, fundraising for church activities, fathers bus fare, visa arrangement, travel to village rent, fundraising for matagali and payment for gang came cutting.
33. Wulan on the states in his study that informal money lending, informal credit in supply of formal credit in developing countries. Despite an increase in supply of formal credit in rural areas, informal lenders remain the dominant source of credit for the poorest households. Improvements of productivity are important in a development process. Productive investment requires funding and the access to credit us crucial for the purpose. Credit might also be a mean tide over bad time caused by sudden illness or an upcoming wedding for poor individuals. Previous studies of the informal credit market demonstrate extremely high informal interest rates charged on loans to poor individual order to make policies that can positively affect poor people’s living conditions; we must understand how informal lenders set the interest rates.
34. Local Studies As a developing country, the Philippines a larged informal sector comprised if micro-enterprises. Many of these are severely resource-constrained vendors operating in public markets, whose survival in business relies heavily on access to financing. This usually comes from the informal sector as well in the form of informal financiers called “ 5-6”. Two types of 5-6 financiers are found in Philippines public markets, each with a distinctive lending mechanism, Filipinos and Indians. The Vendors ranging from poor to middle class, these vendors fall into four categories determined by size, location, and type of enterprise: ambulant vendors, rolling vendors, stall vendors, and multiple stall vendors/private store owners. Ambulant vendors sell smoked fish, vegetables, fish balls, and the like. Unable to buy or rent a stall, they market their goods along the sidewalks, in front of the larger stalls, or at the back of the market near the fish and meat vendors. Many are wives of fishermen living along coast or of small farmers who sell their own harvest supplemented with fish bought from other, cheaper markets. The ambulant vendors are those in need of informal financing. If they cannot sell enough one day they need capital in order to buy goods to sell in the market the next day.
35. Rolling store vendors sell food, dresses, or shoes in customized vehicles, eliminating the need to rent a stall. They occupy spaces at the back of the public market together with other vendors. Five-Six Moneylenders. So-called because of the manner in which they lend, five-six (5-6) moneylenders charge a nominal interest rate of 20 percent over an agreed period of time. A person who borrows 5 pesos from a 5-6 moneylender over a period of one week repays 6 pesos, including 1 peso interest. Neither Filipino nor Indian 5-6 moneylenders require collateral or documents from their borrowers. The success of a borrower’s business and loan repayment history provide a gauge of the borrower’s credibility. Renewal of loans depends on the moneylender’s policy. Some 5-6 moneylenders will renew clients’ loans only after the previous loan is paid in full. More accommodating lenders will renew a client’s loan earlier, subtracting the outstanding balance of the old loan from the new loan and issuing the client the remainder. Filipino and Indian 5-6 lenders play different roles among the vendors at the Santa Rosa market, although the essence of the 5-6 business is the same.
36. Of the twenty to twenty-five Filipino 5-6 moneylenders operating in the Santa Rosa public market during the period of our survey, about 75 percent were women. Many are middle-class, long-time residents of Santa Rosa. The “big-time” lenders had other businesses, such as selling jewelry on installment. Many of the “small-timers” entered the 5-6 business to invest income generated by returning overseas contract workers (OCWs), either themselves or relatives. Client Development and Location. The favored clients of informal moneylenders are proprietors of small businesses (such as vendors) and small service providers (owners of groceries, eateries, tailor shops, and hair salons). Since the lenders’ standard collection schedule is daily, businesses that generate cash on a daily basis are sought. Food-related businesses are ideal because of the perishable nature of food, their daily need for working capital in the form of cash, and their daily generation of profits.
37. A key success factor for 5-6 businesses is the development of a large, good-quality client base which continually borrows and repays without default. However, as micro-entrepreneurs of tiny businesses, the clients of 5-6 financiers are vulnerable to any shocks – external, such as economic downturn, and internal, such as family sickness. In short, regardless of their willingness, micro-entrepreneurs’ ability to repay tends to be unreliable. Therefore, an existing “good” customer for a 5-6 business can easily become a “bad” customer. Thus, simply to maintain the current size of a 5-6 business, the lender needs to look for new clients constantly. For Filipino 5-6s, developing new clients is rather easy. First, people are more inclined to borrow from them as fellow Filipinos. They speak local languages freely, giving them a superior capacity to collect information – including rumors – about their borrowers’ credibility. Many Filipino 5-6s are women, and their preferred clients are also women, who aid in information collection and are easier to pressure for repayment. Because of their heavy reliance on information networks, Filipino 5-6s seek clients in wet markets and other sites where vendors congregate.
38. Credibility Check. Filipino 5-6s frequently use the mutual help scheme paluwagan to generate funds for their 5-6 business and at the same time check the credibility of their clients. The paluwagan is a kind of rotating savings and credit association: a group of people contribute the same amount of money toward a common fund and take turns collecting the total, often called the “salary,” over a fixed period (e.g., every seven days, every thirty days). The paluwagan is a common mechanism for saving money among Filipinos who do not enjoy access to banks Collection. Filipino 5-6s collect payments daily, talking to their clients and other vendors in a cheerful manner. This style is important as it allows updates on the creditworthiness of borrowers. A customer who does not want to pay may try to hide, but this tactic is not very helpful for clients of Filipino 5-6s, who, as residents of the town, can simply visit the borrower’s house. It is also dishonorable to default, so considerable community pressure will be felt to pay back the moneylender.
39. Indian financiers are called “Bombay 5-6s.” Mostly men, they number between fifteen and twenty in the Santa Rosa public market. Filipinos in general have a strongly unfavorable image of Indian 5-6 moneylenders. Who are these Indian 5-6 moneylenders who strike a certain amount of fear in Filipinos? The people called “Bombay” are overseas Indians and people of South Asian descent. Filipinos usually refer to people with South Asian features, regardless of actual nationality or origin, as “Bombay.” Because micro-credit financiers charge high interest rates, the term “5-6” can also invoke Client Development. The preferred clients of Indian 5-6s are the same as those of their Filipino counterparts. However, Filipinos enjoy access to relatively bigger and more established businesses than Indians, who are generally seen as lenders of last resort. It is rare for a micro-entrepreneur in need of financing to approach an Indian; he or she instead seeks referral to a Filipino from an existing client. Filipinos say they are afraid of these foreigners who look “scary” and extend loans at usurious rates and that Indians are known to resort to violence if they have difficulty collecting payments. This renders it difficult for Indian 5-6 moneylenders to attract many “good clients,” and they have adopted certain techniques to meet this challenge.
40. Seeing a thriving business, an Indian 5-6 moneylender will often approach its owner. Almost all those interviewed acknowledged that Indian 5-6 moneylenders take the initiative. But lacking inside information, Indian lenders conduct careful observation in order to pre-screen the profitability of their prospects by the following criteria: Size and location of the store – Bigger stores are deemed more creditworthy. Stores located inside the wet market have a lower chance of repayment default compared to ambulant vendors who can easily disappear. Inventory – A large inventory indicates good credit standing with suppliers and a profitable business. Volume of customers – The busier the store, the better the business. Presence of other 5-6s – Some clients borrow from multiple moneylenders and this can indicate creditworthiness. One Indian 5-6 explained, “I know one of my clients borrows from six Indian moneylenders. Do I give loans to her? Most likely, yes. If many moneylenders have transactions with her, then her business must be good and she must be a good payer.” This can also be checked directly through other Indians who have had business with the client.
41. Indian moneylenders also prefer female customers and told us they seldom have male clients. If a store is run by a couple, Indians prefer the husband to be absent when they make their initial approach. They cited the following reasons: Easier to begin a relationship – Women are responsible for purchasing small household items. One Indian 5-6 said, “Women are easier to convince because they tend to show off. They throw parties and celebrate even if they do not have enough money to spend. Then, after, they notice that their business capital is not enough, they start borrowing.” Security concerns – Since the initial acceptance of business is rare, an Indian 5-6 moneylender needs to stay in the store to build rapport. Women are less violent than men and will not kick him out. Confidentiality – Some women prefer to borrow without consulting their husbands and are afraid to go to Filipino 5-6s, since the information may leak out and reach their husband, other relatives, or friends. In this case, a stranger with little connection to the community is more likely to maintain confidentiality. Prevalence of women in business – Unlike in South Asian countries, women traders, storeowners, and service providers are common in the Philippines. Better chance of repayment – Though it was not explicitly stated by Indian moneylenders, a study on micro-credit shows that women borrowers have higher repayment rates than men.
42. Initial Approach and Credibility Check. Although many Filipinos speak English, for daily communication they use their local language, either Tagalog (Filipino) or a regional language in non-Tagalog regions. Indian 5-6 moneylenders can also speak some English, but many are more fluent in the local languages in which they conduct almost all their business. A Humble but Persistent Approach. The Indian 5-6 moneylenders admit that it is difficult to convince potential customers to do business with them. The key to penetrating the market is to be humble but persistent. Client Location and Business Mix for Risk Diversification. The time required to effect daily collections constrains the number of clients a moneylender can have and therefore profits. In order to increase collection and monitoring efficiency, geographically concentrated clients are better. Thus, wet markets, where hundreds of small stalls operate, are preferred by anyone in the 5-6 business.
43. Terms of the Transaction. Perhaps as a reflection of the difference in risk involved, Indian 5-6s offer shorter credit terms than their Filipino counterparts. The renewal of credit before completion of repayment is also more difficult with Indian than Filipino moneylenders. In 5-6 transactions, while legal documents are not signed, lenders get their customers’ signatures in notebooks, calendars, or even on a piece of paper Some lenders maintain these books at home; some keep the book with the customer and make an entry every day, and some do both. They make entries in their own handwriting so the customer cannot tamper with the record. We encountered one case, however, where an Indian 5-6 used a signed promissory note for a big loan. The contract was not notarized, however, and was therefore not legally binding. It was simply an IOU to psychologically bind the borrower to the lender. Collection from New Clients. The time spent on daily collection visits provides the lender an opportunity to assess the whether the client will pay daily without delay and in what manner. Upon receipt of goods, some clients insult, malign, or shout at the “Bombay” 5-6 when he comes to collect. When this happens, especially with a first-time client, the Indian lender is often quiet and tolerant. He tells the client that he will come back the next day.
44. Daily Collections and the Motorbike. Daily collection of payments is key to the success of 5-6 businesses. If clients of Indian moneylenders are located in the wet market, collection is usually conducted in the morning while they are selling their commodities. The wet markets open as early as 4:00 a.m., and by 8:00 a.m. vendors will have accumulated the day’s profit. Many Indian 5-6 moneylenders start their collections around this time or earlier in the case of a difficult client who has not paid for some days so that he or she is the borrower’s first collector of the day. Wet market vendors are busy until around 10:00 a.m., so many moneylenders finish collecting there by 11:00 a.m. For those clients whose stores are not in the market, the 5-6 collects later in the morning or in the early afternoon