Microfinance is not a new thing for the RBs. This is an ongoing business activity many years back. The micro entrepreneurs have now evolved and became the lifeblood of economic development in most areas of the country. This metamorphosis is accentuated by the rural banks’ fundamental role as the financial backbone to this emerging and evolving sector. The RBs and the micro enterprise sector were once upon a time left unnoticed. But together, with an unquestionable synergy, we were able to unleash our potentials and counter the prevalent idea that being small is analogous to being weak. Smallness is not the resemblance of weakness. In the case of the rural banks, where most of them are small, their size reflects the profile of the market they serve. Size doesn’t matter. What matters really is our substantial impact to the communities that we serve.
As an Association, we’ve taken the lead to steer the rural banking sector toward an improved and enhanced microfinance service to micro clients. In collaboration with our strategic partners we were able to come up with valuable and effective capability building programs to meet the gap between what our micro clients demand and how much we can provide. I laud our partners from the USAID and Chemonics International for helping us out with our RBAP-Microfinance Access to Banking Services program. The RBAP-MABS program has been with us since 1997 which initially started in Mindanao as a technical assistance to enable the beneficiary rural banks to profitably and effectively serve the micro clients. Since 1999, MABS program has been instrumental in providing micro credit with more than 500,000 loans to more than 200,000 borrowers with loans amounting to 6.5 Billion pesos through the 80 participating banks with 224 branches nationwide. Furthermore, MABS banks were able to generate savings with more than 265, 000 deposit accounts amounting to more than half a billion pesos. And it is also estimated that there are around 200, 000 jobs generated by the participating banks in 2004 thereby contributing significantly to the employment generation program of the government.
Apart from the USAID-funded program, we also get support funding from the government through Peoples Credit and Finance Corporation and QuedanCor.
Altogether, there are 4 microfinance-oriented and 178 rural banks with microfinance operation as of December 2004 for a total of 526 branches. Loans disbursed amounted to 3.3 Billion pesos benefiting 522, 008 borrowers and generating savings component of 887 Million pesos.
Currently, only 28% of the 1,900 rural bank branches nationwide are directly and formally involved in microfinance. Indeed, there is more to be done. As we celebrate the Rural Banking Week and also in consonance to the International Year on Micro Credit, we appeal to the government to fortify its support as we aim to effectively fulfill our role as the prime movers of progress through microfinance by creating an RB sector friendly policy framework. This include among others BSP’s initiative to ease the moratorium on bank branching. The sector has been very vocal in its stand to this issue since Gov. Amando M. Tetangco, Jr. mentioned its possibility during the Induction Program of RBAP Directors and Officers last June 30, 2005. We truly believe that through this, the tilted playing field will be evened between and among microfinance players such as Coops, NGOs, Rural and Cooperative Banks. Through this, the rural banking sector will be able to sprawl its outreach even to the far flung areas where financial investments and development are needed most.
Lastly, let me invite everyone to join us, Rural Bankers Association of the Philippines, as we celebrate Rural Banking Week. Let us all unite in healing our land and help it rise above the shams and drudgeries of the trying times. Through and beyond all these, the rural banking sector will continue to be your partner in propagating countrywide progress.
Sa mga rural banks, mga pamayanan ay uunlad, ang ating bansa ay uusad!
GEN. WILLIAM K. HOTCHKISS III
1. Her Excelency Glroria Macapagal-Arroyo, President Republic of the Philippines
2. Sec. Margarito B. Teves, Department of Finance
3. Gov. Amando M. Tetangco, Jr., Bangko Sentral ng Pilipinas
4. Pres. & CEO Ricardo M. Tan, Philippine Deposit Insurance Corporation