Draft rules for microfinance NGOs out
Philippine Daily Inquirer
6:00 am | Thursday, July 25th, 2013
The Securities and Exchange Commission has released the draft rules for
nongovernment microfinance organizations as part of broader efforts to
support businesses of low-income households.
MANILA, Philippines—The Securities and Exchange Commission (SEC) has
released the draft rules for nongovernment microfinance organizations as
part of broader efforts to support businesses of low-income households.
The rules, posted on the website of the corporate regulator on
Wednesday, are also seen to bolster consumer protection efforts and
encourage these households to save.
The SEC is seeking comments for the guidelines, which also outline the
requirements needed to establish a microfinance-NGO, sets how their
funds should be allocated and details the needed documentation, as well
as the penalties for violations.
It said covered microfinance organizations may grant loans from P2,000
to a maximum of P150,000 subject to "reasonable and conscionable
imposable interest rates and charges."
The minimum "seed capital" was also set at P150,000 although the SEC has
the discretion to require a larger amount.
In terms of how funds will be allocated, the SEC said 70 percent should
go to direct lending purposes. Moreover, its total investments in real
estate, whether shares of publicly traded firms or "other real
estate-based projects," shall not exceed 25 percent of the
organization's net worth.
Majority of its members must also be Filipino citizens and foreigners
will only be allowed to be a member of the said microfinance firm if the
individual's country "accords reciprocal rights to Filipinos."
For those microfinance firms already operating and currently
non-compliant with this rule, the SEC will give them one year to do so
after the rules become effective.
Failure to comply means the microfinance organization will be suspended,
after due notice and a hearing, for a period of 30 days.
These organizations, which are non-stock and non-profit entities, make
use of alternative credit schemes and simplified loan application
procedures. The goal is to grant loans to the "poor and low-income
households for their microenterprises and small businesses, to enable
them to raise their living standards.—Miguel R. Camus
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