International Year on Microcredit: Culmination Activity

Message of Gen. William K. Hotchkiss III (Ret) President, Rural Bankers Association of the Philippines.

Greetings from the Rural Bankers Association of the Philippines.

We share in the pride and joy that pervades this gathering of microfinance stakeholders today who, as one voice, have joined the world in declaring their unilateral recognition of microfinance as a pillar of progress and peace in the countryside. This acclamation bears an even deeper meaning for us in the rural banking sector who have believed in the potency of microfinance as a tool for alleviating poverty more than fifty years ago.

While small by many measures compared to our counterparts in the banking system, our strength lies in our broad geographical distribution across the country that reaches the far-flung communities that require financial services. It is this connectivity that makes rural banks the conduits of economic growth and development in the countryside. And it is our financial intermediation that creates oportunities that sustain the viability of local economies.

Significant developments in the rural banking system includes the hosting of a microfinance technology called “Microenterprse Access to Banking Services”. A joint projct between RBAP and USAID, the replication of this microlending format among rural banks has been successful with the number of its microcredit and microdeposit clients continuously increasing. The partnerships we have forged witht he government banks and agencies have given us access to financial resources that enabled us to provide more loans to our constituencies in the rural areas. Our collaboration with the private sector has yielded very encouraging results specially in harnessing technology for the benefit of our microfinance clients. We find common cause with non-governmental organizations as we cooperate in poverty-alleviating projects specially those within the service areas of our rural banks.

The challenges wrought by the 21st Century as well as the complexities of the global economy require a retooling of the rural banking system if it is to competitively participate in this new economic order. The parochial image of rural banks must shift to a more progressive orientation in many facets – in its operational capacity, in its product development and service delivery, in its technological infrastructure, to mention to more salient ones.

It is from this view that we appreciate the need to reassess the practicability and relevance of our enabling legislation – the amended Rural Banking Act of 1992. It is through this document that we can redefine the role of rural banks to make it more current and relevant in contemporary times. We also envision a moment when we can be empowered to run the range of banking flexibilities that our countrerparts in the banking system are allowed.

Receptive to new ideas and initiatives, we have reaped encouraging results from our audacity. The merger of 3 rural banks in Davao in 2003, for instance, has created the biggest rural bank int he country today with assets in excess of 3 Billion pesos. We are heartened by this achievement, and thus our resolute search for new initiatives that will favor our rural constituencies continues. In this line, we are evaluating the possibility of rural banks directly handling the remittances of overseas Filipino workers (OFWs) straight to their respective municipalities for the immediate gratification of their families and communities. Relatedly, we are seeking the flexibility to handle foreign currency as a banking service. As an institutional strengthening measure, the infusion of foreign capital in rural banks is under consideration. We submit that there is boldness in these moves but it is in blazing new trails that progress is achieved. And history has taught us so.

We feel teh vibrancy of the rural banking system amidst the adversities and distractions of the many unsettling local and global events. We, however, remain focused on our goal to prepare our sector to meet the emerging challenges of the dynamic globalized world. But our initiatives require the nurturing support of government for them to become realities. Through our half a century of existence, the rural banks have been – and remains to be, the steadfast partners of the government in its goal to fight poverty and bring progress to the rural areas.

We need government to empower the rural banks as the economic outpost for sustainable prosperity and peace in the countryside. As we are the medium that deliver financial services to the broadest segment of our population, so also are we the instruments of peace int eh rural areas as purveyors of the means to fight poverty, the taproot of insurgency which has been a continuing threat to national security.

In a few weeks, rural bankers from all over the country will gather in one of their important annual events – their charter symposium. In this forum, we will echo all that I have shared with you today as we chart our direction in the coming years. We seek guidance from government on how we can continue to be a durable partner in their programs in the countryside. It is our earnest hope that government can join us in this activity to lend their inspiration to strengthen our resolve to stay the course despite the difficulties.

We, teh rural bankers, declare our unwavering support to the propagation of microfinance as a tool for poverty alleviation as we equally dedicate ourselves to be a vital factor in the quest for a better life for the Filipino people.

Thank you and mabuhay.