Rural Banks Providing Wider and more Accessible Rural Financial Services

(This article was first published in the Manila Times, 26 August 2010)

I am glad to note that the dearth of financial activities in the rural areas is now being addressed by the rural banking sector paving the way to an easy access in financing for micro, small and medium enterprises (MSMEs)

To compliment this new thrust, the Rural Bankers Association of the Philippines (RBAP) has been able to partner with several international assistance programs to support the efforts of the rural banks to expand financial services in the countryside.

Expanding range of Microfinance Services

As RBAP official, I am pleased to see the progress that the rural banking sector now plays with regard to increased access to microfinance services. Since 1997, RBAP with the support of the United States Agency for International Development (USAID) has continued to support RBAP’s Microenterprise Access to Banking Services (MABS) program.

The MABS program has assisted hundreds of member rural banks to improve and expand the microfinance services they offer in the countryside.  These include, not only micro-credit but also micro agri lending, housing microfinance, savings mobilization strategies, mobile phone banking and, this year, microinsurance services.

Under this program, rural bankers continue to be provided with state of the art technical assistance and training to enhance their capability to profitably these microfinance products and services.

Since, the start of this program, rural banks have disbursed more than 2.2 million micro loans valued at more than P30 billion given to over 750,000 clients and are managing more than 1.4 million micro deposit accounts.

Expanding Private Sector Partnerships

Over the past few years, RBAP has also been assisting member rural banks through various private sector partnerships to strengthen the range of financial services offered to MSME clients and others in the countryside.  These include work with third party ATM service providers such as ENCASH and Nationlink to offer ATM products and services. Mobile Phone Banking Services have also been strengthened by our new partnership with Microfinance Opportunities supported by the MasterCard Foundation along with our local private sector partnerships with leading telecommunications companies especially Globe Telecom’s G-Xchange Inc (GXI) and more recently Smart Communications. In addition, our new partnerships in microinsurance with insurance providers AA International, BPI-PhilAm Insurance and its subisidary Philippine American Life Insurance, CARD Microinsurance Agency (CAMIA), Country Bankers Life Insurance Corporation, Malayan Insurance Company, MicroEnsure Philippines, Philippine Prudential Life Insurance Inc, Pioneer Life Insurance, and United Coconut Planters Life Assurance Corporation are all supporting the rural bank expansion in microinsurance along with our new partnership from the International Labour Organization (ILO) and the Bill and Melinda Gates Foundation grant  as discussed in last week’s article by RBRDFI Chairman Joseph Omar Andaya.

Supportive Regulatory Enabling Environment

Developments in the rural banking sector of course would not be possible without a supportive regulatory environment.  RBAP and its member rural banks are fortunate to have the support of various government agencies that have created an appropriate enabling environment to expand MSME financial services.  The Bangko Sentral ng Pilipinas (BSP) continues to keep abreast of developments in the sector and maintains a positive dialogue with RBAP during monthly consultative meetings.  The BSP has demonstrated its commitment over the past year to supporting various new circulars and approvals that have helped expand services offered by rural banks.  These have included expanding micro agri lending, housing microfinance, the accreditation of microfinance rating agencies, and support to mobile money and mobile phone banking services. In addition, along with the Insurance Commission of the Philippines, the BSP is also now allowing rural banks to expand to facilitate the offering of microinsurance services in partnership with insurance companies.

We in the RBAP continue to work closely with international aid agencies, private sector partners, and the regulators in order to facilitate the expansion of a full range of financial services to MSMEs, farmers, and low-income households throughout the Philippines.

(By Vicente R. Mendoza, Executive Director/Assistant Treasurer RBAP Inc.)