The Philippine banking system handed out P13.226 billion in microfinance loans as of end-March, surging by 23.1% from the P10.747 billion granted as of the first quarter of 2016, according to data from the Bangko Sentral ng Pilipinas (BSP).
Banks lent more funds as micro-deposits grew to P7.67 billion, jumping by a third from P5.783 billion during the same period last year.
Under existing rules, the BSP allows banks to engage in microfinance as a platform to provide access to credit to poor and low-income households, as well as small enterprises. The central bank has been prodding financial players to extend more loans to these unbanked sectors to help improve financial inclusion and help improve living conditions.
Some 1.686 million Filipinos were able to access funds during the quarter, which rose from 1.448 million borrowers during the comparable year-ago period. A total of 167 banks provided microfinance services as of March, unchanged from a year ago.
Microenterprise loans made up the bulk of the borrowings at P11.226 billion, or 85% of the total. The amount surged by more than a fifth from P9.243 billion previously.
All other loan products posted double-digit increases during the first quarter, the BSP said.
Borrowings under the Microfinance Plus platform — or loans ranging from P150,001 to P300,000 which may be availed of by small firms with good credit standing — nearly doubled to P624.6 million from P329.1 million.
Micro-agri loans, or short-term credit for farmers to a maximum of P150,000, also rose by 17.3% to P294.7 million. Meanwhile, small loans for housing jumped by 28% to reach P889 million, according to the central bank.
The BSP has been relaxing rules for micro-banking offices by allowing them to offer more financial services to the public, such as releasing small-scale loans, serving as bills payment centers, selling microinsurance products, and exchanging foreign currency to a maximum of $300 per microfinance client.
BSP Governor Nestor A. Espenilla, Jr. said in a speech on Friday that the central bank is actively promoting new electronic channels to make financial services more accessible, especially to far-flung communities without any bank branches.
The changes include the planned National Retail Payments System to process interbank transactions, the use of non-bank players like convenience stores and pawnshops for deposits and withdrawals, and simplified requirements to open and maintain bank accounts.
“In the BSP’s digital finance policy package, banks and other financial service providers now have better platform to expand their reach and deliver better and cheaper product to their clients in digital solutions,” Mr. Espenilla said during the launch of the 15th Citi Microentrepreneurship Awards on Friday. “These market-enabling interventions will make rural financing a fertile ground for service providers looking to expand their client base.”
The National Baseline Survey on Financial Inclusion released by the central bank in 2015 showed that only 43% of Filipino adults held savings, with 68% of them opting to keep their money at home rather than placing them as bank deposits.