|
Population (millions) |
79.9 |
|
Gross domestic savings (% of GDP) |
17.7% |
|
% Population under national poverty line |
46% |
|
Regulated microfinance institutions |
Thrift and rural banks, cooperative banks, credit unions, and NGOs. |
|
Non-regulated sources of microfinance |
Traders, input-suppliers, money-lenders, ROSCAs, and ASCAs |
General Approach to Regulating
Based on the Comparative Database on Microfinance Regulation by the IRIS Center of the University of Maryland|
Thrift Banks |
Rural Banks |
Credit Unions |
NGOs and NGO-MFIs |
|
Definition or description of institution | Thrift banks shall include savings and mortgage banks, private development banks, and stock savings and loans associations organized under existing laws, and any banking corporation that may be organized for accepting deposits, making loans, providing short-term working capital, medium- and long-term financing, to businesses engaged in agriculture, services, industry and housing | A joint stock company which is engaged in the business of publicly accepting deposits and uses these funds to make loans and investments for farmers and merchants, and the people of rural communities |
Registered association of persons with a common bond of interest who have voluntarily joined together to achieve goal, making equitable contributions to the capital required and accepting a fair share of the risks and benefits of the undertaking in accordance with universally accepted cooperative principles |
Non-stock, nonprofit organization which has the goal of targeting and reaching the poor through micro loans and other financial services |
|
Guidelines & restrictions on financial services |
Permitted: Savings deposits and loans Prohibited: insurance |
Permitted: Savings deposits and loans, rediscounting of paper, checking and NOW accounts with prior BSP approval and higher minimum capital Prohibited: insurance |
Permitted: savings deposits and micro-loans from/to members |
Permitted: Microfinance loans. Prohibited: public deposit-taking |
» Download Country Profile of Microfinance Regulation
CBB: Segmented Promotion: Balancing Management and Market Responsiveness
As MFIs first started focusing on demand, market responsiveness was assumed to mean offering a wide array of products. On the savings side, however, experience shows that offering a few well-designed products that appeal to a broader section of potential clients is preferable. The Cooperative Bank of Benguet, a rural bank in the Philippines, offers two simple savings products: one liquid (passbook savings) and one semi-liquid (term deposits), which are targeted at all their clients regardless of segment. This simple product mix is easy to sell and reduces management costs.
Credit Union Empowerment and Strengthening (CUES), 2003
By Luis Sasuman
This case study outlines the attempt of Credit Union Empowerment and Strengthening (CUES), Philippines, to transform cooperatives into responsible financial institutions providing financial services and education to the poor.
CUES adopted two initiatives:
- Model Credit Union Building (MCUB) - to provide financial sustainability planning through the P.E.A.R.L.S. monitoring system;
- Savings and Credit with Education (SCWE) - to promote capacity building of women.
The author observes that the project has improved the socio-economic conditions of member households. Institutionalization of training has led to supervisory and regulatory efforts. A long-term impact has been the increase in access to financial intermediation and other services. The future direction is to institutionalize financial and monitoring mechanisms and to spread them to other areas.
Long-Term Contractual Savings Agreements - Scholarship Plan Phils. Inc
Summarized from: Graham A.N. Wright, A Critical Review of Savings Services in Africa and Elsewhere, MicroSave, 1999
By Graham A.N. Wright (author of the study); case study author: Rutherford, 1998
In the Philippines, contractual savings "Educational Plans" marketed at middle and upper-income households worried about how they are going to pay for a decent college education for their sons and daughters - are common. Their offices are in towns throughout the country. Scholarship Plan Phils., Inc, for example, has its head office in Quezon City and offices in forty locations. It is registered with the Securities Exchange Commission. It markets educational plans and pensions, and invests the inflow of savings in trust funds in banks and directly with corporate partners.
Scholarship Plan Phils., Inc.'s standard product is a five year savings regime followed by ten or twelve year dormant period in which the invested amount remains with the company, followed by a pay-out in a lump sum or in staged payments. The matured sum may also be reinvested. A worked example from the Tabuk office involved a pension in which 73,200 pesos ($2,091) is invested over five years through monthly instalments of 1,220 ($38) pesos. Ten 'dormant' years follow, after which a lump sum of 200,000 ($5,714) pesos is available, or 600,000 pesos if the sum is reinvested for a further ten years. 300% growth in ten years is equivalent to an interest rate of just under 12% a year, compounded annually.
Another approach to medium and longer term savings systems is the fixed term deposit, which typically offers the client an enhanced rate of interest in return for a commitment to leave the savings on deposit with the institution. These savings plans are useful for poor people, particularly those who have windfall gain, which they want to store for a pre-determined period.
More about Rural Bank of Panabo (36 KB, PDF)
Savings Mobilization Strategies: Lessons From Four Experiences, 1998.
Around the world, poor households save in various forms and for various purposes. Although empirical evidence suggests that the poor would deposit if appropriate financial institutions and savings facilities were available, little progress has been made to establish microfinance institutions (MFIs) as full-fledged financial intermediaries. The CGAP Working Group on Savings, formed in 1996 and chaired by GTZ (representing Germany), completed case studies of four deposit-taking MFIs and a related comparative paper in 1998. This note represents a synopsis of these studies.
The following case studies can be found in Savings Operations for the Poor: An Operational Guide, edited by Madeline Hirschland, forthcoming from Kumarian Press ( 1294 Blue Hills Avenue, Bloomfield, CT 06002 ).
Starting up with savings: Cooperative Bank of Benguet
The Cooperative Bank of Benguet (CBB), a rural bank in the Philippines, started offering savings services from the moment it opened its doors in 1992. This one-page case described the greatest challenges CBB faced as a new institution that aimed to mobilize deposits.
Pricing by a rural bank in the Philippines: Green Bank of Caraga
This one-page cases illustrates how a large rural bank in the , the Green Bank of Caraga, sets interest rates for its deposit services. It compares these interest rates to those of one of its competitors, a large commercial bank.
See also:
Philippines Country-Level Savings Assessment, CGAP, 2005
Savings Mobilization Strategies: Lessons From Four Experiences (RBP in Philippines), CGAP
Savings in the Context of Microfinance - Lessons Learned from Six Deposit-Taking Institutions. 1998, Sylvia Wisniwski
Where are they now? (Philippines - RBP). 2006, Ruth Goodwin-Groen
Experiences of the Philippines - Rural Banks in Microfinance. 2006, ADB