PHILDEVFINANCE (old news)

Monday, April 4, 2011

NCSD with its network of more than 150 NGOs nationwide

NCSD with its network of more than 150 NGOs nationwide

ONE of the recipients of a PEF loan is the National Council of Social Development (NCSD), a network of more than 150 NGOs working on different projects throughout the Philippines.

NCSD tied up with another NGO under its umbrella, the Center for Community Transformation (CCT) to carry out the micro-financing project. The CCT specializes in microfinancing. It has several offices nationwide.

Marian Opeña, the officer in charge of NCSD, said they don’t have the capability to go directly to the people to lend the money so they tapped the CCT to implement the project.

NCSD entered into a joint venture with CCT, on a 50-50 sharing of work and profits.

“CCT ishe one to implement the project. We gave them the money but we facilitated the loan from PEF. We’re the one talking to PEF but we get one of our members whose expertise is microlending—the CCT,” Opeña said.

NCSD’s projects are concentrated in the Camanava area—Caloocan, Mala-bon, Navotas, and Valenzuela

NCSD got a P6 million loan from PEF in 2005 through a memorandum of agreement. Together with the CCT, NCSD carried out the program from 2006 to 2008. The projects still continues at this time using the seed capital the NCSD accumulated on its own in three years.

Opena said that aside from the P6-million loan, they also received P5-million grant from PEF because of their good performance. PEF evaluated NCSD and because of CCT it was able to get the 91.1 percent of the total amount of the P6 million and have it converted into a grant of more than P5 million.

“This grant will become seed money for us. Because we ended the contract with CCT with that we will make a new arrangement with them,” she said.

CCT Lending system

Any member can borrow indefinitely, Opeña said, as long as they have good repayment records. A borrower can initially get P4,000, and if they perform well in repaying, they can borrow was much as P50,000. The P50,000-loan is usually at the level of family enterprise, not a single borrower.

In Caloocan the borrowers were members of a Christian fellowship organization It has 98-percent repayment because of a mechanism created by CCT to make repayment easier. Borrowers are organized into several groups, each usually composed of 15 individuals. They help each other in paying the loan amount. And if a member fails raising the necessary amount due for a certain period other members help.

Some members fail to repay because sometimes they encounter unexpected expenditures or emergencies in the family and used the money intended for the business. The repayment is weekly and CCT designated a collector to get the money from members.

“There are beneficiaries who stopped borrowing because they were able to put up a seed capital. Some of them when their children get married they are also given loans and also the relatives,” Opeña said.

The concept of organizing borrowers in groups came from CCT. The CCT is good in micro-financing and in fact it received an international award for micro financing. CCT also has offices throughout the country. And CCT also has a fund of its own, Opeña said.

CCT’s lending system also provides savings for borrowing members. For example, a member borrows P4,000-loan, in 15-day term he’s required to pay P300. But another P50 will go to his savings so the total due becomes P350.
Besides the savings members also get insurance cover.

CCT’s saving program is considered the best based on a research conducted among borrowers. Sometimes the lending system is ruined by some borrowers who have other loans from other entities. They take a loan from CCT to repay their loan with the other lenders. Opeña acknowledged it as a problem.

Money for OFWs

NCSD also had an innovative way of helping people through a program of lending money to individuals wanting to work abroad. Driving lessons for OFWs were also offered so that when the work abroad they have the skills.

Under the lending program, a borrower can get as high as P70,000 for his placement fees but Opeña said nobody has used the offer.

“I think people value their families. Why go abroad if you can make money here even a small amount. That’s the Filipino culture. If you can lend me P50,000 maybe I could use it to start a business here and there’s no need for me to leave my family.”

This is the reason why NCSD initiated training courses, like cell phone and computer repairing.

Capability building

But Opeña said that not preparing the loan recipients on how to properly manage the money they get from NSCD will doom the project so aside from the original P6-million loan given to them they requested for less than P4 million as a separate assistance intended for capability building.

“The total is P9.8 million. The P3.8 million was used for vocational skills training of Out of Sschool Youths. Aside from micro-finance we have training of OSYs and capability building,” she said.

While there’s capability building for OSYs their mothers were also given micro-finance training by the CCT. The NCSD also gave the mothers seminars on effective parenting.

NSCD also gave drug prevention, rights of the child and other semiars during day loans were released. the loans. Other borrowers who have children not in school were also given training on skills.

Among the training courses are automotive, computer and cell phone repair, and beauty care, all free given by PEF. NSCD provided the transport allowances, materials, registration fees for all the trainees. The 10-month program for the youth was in coordination with Tesda.

The entire project, implemented in three years, benefited 4,000 individuals not to mention other supports given to non-members who didn’t received the loan.
Asked how a borrower qualifies for the loan, Opeña said borrowers are recommended by area leaders. Sometimes some beneficiaries make the recommendations. After the initial process, applicants are subjected to thorough verification. CCT personnel personally visit them and they are also required to complete certain documentation.

The Camanava micro-financing is NCSD’s special project. Opeña explained that the real advocacy of NCSD is children’s welfare especially preventing child abuse.
“NCSD is a network of NGOs and peoples organization specifically working on children, special protection, all the disadvantage children, child labor sexual abuse and then indigenous children,” she said.

The organization’s biggest donor is Unicef aside from other local financiers like PEF. Opeña said they want more money so they duplicate the project in other areas.
NCSD started the program to make every family in its target area more financially stable. Once families have a better source of income the children also become more secure and get the proper care and education they need.

“Because even if you teach the mothers how to take care of their children if they don’t have livelihood its useless.

There’s a time in our experience that sometimes if they get a loan they will buy food that’s the time that they are not able to repay,” Opeña said.
She added that looking after the welfare of children need a holistic approach and that’s the reason NCSD came up with a micro financing program.
Aside from the micro-financing, NCSD also has educational assistance for younger children funded by the Unicef.

NCSD provides school supplies to pupils coming from the public schools and until now Opeña said they are active in carrying out the program.

First microfinance project

The project is the first microfinancing project for NCSD and Opeña said they want to replicate it in other areas because of its success. However she said PEF appears to be not willing to lend them money.

“It’s successful but I think they are not interested in giving us money again. If in case we do it again we plan Pasay.

Pasay City is the poorest, we have a lot of NGO in Pasay and they want it. Pasay, Las Pinas, we really need micro finance,” she said.

But PEF signified that it’s not interested in Metro Manila area and it wants similar projects done in the provinces. And if PEF doesn’t want it done in Metro Manila, Opeña said they can support similar project in the provinces and currently they are looking at doing it in Samar.

Samar is one of the poorest provinces in the Philippines.

It was NCSD who approach PEF for the funding for the project, Opeña said, adding they were able to repay the loan amount in three years.

The microfinancing project is still ongoing in Caloocan although NCSD and CCT weren’t able to cover the entire area. Malabon, Navotas, Valenzuela weren’t able to get allocations and Opena said it would be better if NCSD can get more funds so it can cover more areas.

Soliman not a recipient

Commenting on the alleged involvement of Secretary Soliman in the alleged anomalous PEACE bond offering, Opena said she didn’t believe the social welfare chief committed wrongdoings.

“Dinky wasn’t there when we got the money. It’s the PEF that released the money not the CODE NGO although PEF was organized because of the NGO network and NCSD is one of the networks of CODE NGO. Everybody benefited down to the people. In NCSD we haven’t got money they just pay our people, book keeper, people who monitor that’s all,” she said. “We haven’t received anything, not even small supplies. They didn’t give me any supervising fee.”

PEF has measures to prevent anomaly and misuse of money. PEF regularly organizes meetings and assemblies with NGOs. Every organization that receives money makes financial reports so there’s transparency.

Opena said she can attest how the PEF people do business, how they abide by the guidelines. PEF always monitors organizations receiving the loans, auditing them many times in the course of project implementation.

“They are very strict. In fact they are stricter than other funders like the United Nations Children Fund [Unicef]. At Unicef its OK they are more lax,” she said.
At PEF they ask about many things, attendance, official receipts, canvass etc. so Opena said she doesn’t believe there is any anomaly in the organization. In addition a borrower with bad record can’t get any grant from PEF.

But in the case of NCSD, Opena said they were given huge amount of grant because of its good performance.

PEF gave NCSD the grant last year after a thorough evaluation. The evaluation was so strict and rigorous according to Opena, conducting meetings many times with NCSD, CCT, and the beneficiaries. They went to the project site to ensure transparency.

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Rural banks expand mobile phone banking in the countryside

Rural banks expand mobile phone banking in the countryside

APARTNERSHIP between telecom firms and rural banks in providing financial services to more Filipinos is expected to reach new heights with the development of newer technologies and acceptance of mobile banking in the countryside becoming more prevalent.

Many expect mobile money transfers (MMT) to boom over the next three years as the cost and ability to send money and pay for basic goods and services are cheaper and more efficient than the traditional modes. Globe Telecom subsidiary G-Xchange and the Rural Bankers Association of the Philippines (RBAP) are now working together to expand mobile banking services and provide a wider array of financial services. RBAP is also working with Smart Communications to enable MMT via the Smart Money platform and eventually mobile phone banking services for Smart subscribers as well.

While MMT is a very useful service for remittances and payments, the real potential comes from combining these platforms with a bank to offer real mobile phone banking services that make it easier for people to save, borrow, repay their loans, pay bills, facilitate rural payroll, or send or receive remittances. With more than 2,700 branches and other banking offices and more than five million clients, the rural banks are in the best position to provide the largest bank network partnership in the countryside.

With the service, cell phone owners can remit and donate money, receive and make loan payments, pay salaries, commissions and bills through a text message. It is now estimated that there are more than 70 million individual mobile phone subscribers in the Philippines and more than half of them do not have bank accounts. This is the large untapped market that rural banks are now focusing on in partnership with GXI and, in the near future, with Smart.

Text messaging, which is the cheapest way of electronic communications, is also emerging as the fastest way to avail of banking services. Through the partnership between RBAP and GXI, rural bank clients get access to different mobile phone banking services from anywhere they are, including areas where the security situation is unpredictable, through the use of the mobile phone.

Mobile phone banking services offered via the GCash platform include Text-A-Payment, Text-A-Remittance, Text-A-Deposit, Text-A-Withdrawal, Text-A-BillPay, and Text-A-Sweldo. In addition, rural banks can help small merchants take advantage of mobile commerce opportunities to become more efficient by ordering goods or supplies via mobile money or to sell goods and services to anyone, anywhere.

By providing mobile phone banking services and facilitating mobile commerce, rural banks, at the same time, encourage development in rural areas and provide easy access to banking services to underserved rural communities and small and medium enterprises in far flung areas.

Rural banks are also now major players in assisting with settling GCASH Remit transactions across the countryside with hundreds of thousands of transactions being settled by rural banks in remote areas projected in 2011.

Remittances and money transfers via GCASH Remit along with Text-A-Sweldo salary payments for medium and large companies in rural areas are some of the most frequently used services but others such as Text-A-Payment are becoming more popular among microfinance clients. The service allows borrowers to make microfinance loan payments without having to travel to the bank and without the need to offer traditional pick-up collection methods deployed by some lenders.

To use mobile phone banking services at a rural bank, a bank client only needs to register their mobile phone with the G-CASH service and load their mobile wallet at GCash Cash-in and Cash-out outlets. Many of these shops have now entered partnerships with the rural banks to more actively promote mobile phone banking services. With the new know-your-client regulations issued by the Bangko Sentral ng Pilipinas, opening up a micro-deposit account is easier than ever before. Now, clients wanting to ensure the full potential of mobile money platforms can easily open up an account with any accredited rural bank and start taking advantage of mobile phone banking as well as mobile commerce opportunities.

In addition to the Microenterprise Access to Banking Services (RBAP-MABS) program, which has been supported by USAID/Philippines, RBAP has also received technical assistance from Mercy Corps and MICRA Philippines, which receive support from the Bill and Melinda Gates Foundation, as well as Microfinance Opportunities.

Through these combined efforts, RBAP sees a bright future to harness the significant potential of MMT platforms as well as local partnerships with mobile money cash-in and cash-out outlets to expand greater access to banking services.
Rural banks have now processed more than P9 billion in GCASH related mobile phone banking transactions, and the number and amount of transactions are expected to grow exponentially this year.

With the lightning speed evolution of technology, RBAP sees that mobile phone banking services will become a major channel in the coming years and is well positioned to take advantage of the new and exciting developments. We envision a world where millions without access to banking services can now easily open up a bank account and transact from anywhere at anytime.

Trade blocs support BSP move to close Banco Filipino

Trade blocs support BSP move to close Banco Filipino

By Amy R. Remo
Philippine Daily Inquirer
First Posted 22:15:00 04/03/2011

MANILA, Philippines—Key business groups collectively heaved a sigh of relief when the Bangko Sentral ng Pilipinas decided to shut down Banco Filipino.

The groups—Financial Executives Institute of the Philippines (Finex), Makati Business Club (MBC) and Management Association of the Philippines (MAP)—said the BSP helped preserve the public’s confidence in the banking sector by taking action on institutions suspected of dubious dealings.

Industry players stressed the importance of preserving public confidence in the banking sector, which depends on depositors to generate resources used for lending and other investment activities.

“The presence of a regulator is meant to prevent loss of confidence in the banking system that can put the proper functioning of the economy at risk,” the three business groups said in a joint statement released Friday.

The statement was issued shortly after Banco Filipino Savings and Mortgage Bank filed charges against BSP officials before the justice department.

Banco Filipino took legal action on Friday to protest the alleged unwarranted closure of its branches. The thrift bank also accused BSP officials of graft.

The BSP, in turn, filed legal charges against Banco Filipino officials. The regulator accused the bank officials of violating various banking regulations, including extension of huge loans to owners, directors and officers of the institution.

The Monetary Board of the BSP decided on March 17 to place Banco Filipino under receivership of the Philippine Deposit Insurance Corp., three days after the institution declared a bank holiday, unable to service withdrawals of clients.

This was the second time Banco Filipino was ordered closed. The first was in 1985, when the old central bank placed the savings bank under receivership for insolvency.

The old central bank was criticized for the closure of Banco Filipino, especially after the Supreme Court ruled in 1991 that the closure was illegal and was done in an arbitrary manner with abuse of discretion.

Banco Filipino said the BSP is committing the sin of its predecessor by making the same mistake. The thrift bank claims it is not insolvent, and has assets to meet its obligations.

But Finex, MBC and MAP firmly supported the BSP decision, saying that the closure of Banco Filipino was an appropriate move “and deserves to be accorded the presumption of regularity.”

How gov’t used the P10.17B in PEACE bonds still unclear

How gov't used the P10.17B in PEACE bonds still unclear

Code-Ngo Beneficiaries
Code-NGO's PEF transparently accounts for all its funds

By Angelo Samonte, Special Reports Contributor

AFTER the Times special report on July 18 last year, in which were listed all the NGOs with poverty alleviation projects that received loans and grants from CODE-NGO's Peace and Equity Foundation (PEF), the questions about Social Welfare Secretary Corazon "Dinky" Soliman seemed to have died down.
CODE-NGO is the acronym for Caucus of Development NGO Networks.

The Poverty Eradication and Alleviation Certificates or PEACe Bonds raised P10.17 billion for the government. They earned P140 million in commissions and a grant of P1.4 billion for this bond offering's inventor, CODE-NGO, of which Sec. Soliman was once a chairman.

It was immediately criticized when it was invented and became known to the public 10 years ago. The Freedom from Debt Coalition examined the whole thing and questioned how CODE-NGO with RCBC as its buyer could have won the bidding to handle the bonds without being favored by the then Finance Department bosses.

FDC also found many things wrong with the process.

But in the end the money was raised for the government.

The controversy about it keeps surfacing because many people who have been commenting on the issue despite Senate and House hearings cannot seem to understand that CODE-NGO did not get the proceeds from the sale of the bonds.
Last November the House had hearings which Secretary Soliman did not honor with her attendance.

She did not attend because she had nothing to contribute to answer the questions the congressmen were asking: How did the government use the P10.75 billion realized from the PEACe bonds?

It was even bruited about that the former President Arroyo, now Rep. Arroyo from Pampanga, was getting ready to grill Soliman who was her DSWD secretary that became one of the "Hyatt 10" who deserted and turned against her.

But it is true that Sec. Soliman could not possibly give any information about what happened to the PEACe bonds' P10.17 billion that entered the government's treasury 10 years ago. She was no longer an officer of CODE-NGO at the time of the PEACE BONDS project.

And CODE-NGO and its PEF had given all the data and amounts involved and the names of its beneficiaries.

What CODE-NGO is involved in is the P140 million in commissions it earned by being the principal in the bond sale, undertaken by RCBC, and the P1.4 billion grant it received for it success in selling the bonds—which are maturing this year and must be paid with interest by October.

The repayment to bond holders will be the P35 billion face value of the bonds.
CODE-NGO and its Peace and Equity Foundation have apparently done a good job of using its money to help marginalized people through hundreds of NGOs all over the country.

This reporter looked into two particular NGOs that received loans and grants from PEF. Their stories are told here.

These reports are offered now in response to those who are asking how the NGO recipients are using the loans and grants from CODE-NGO – PEF.

Earlier this year, CODE-NGO held a press conference to clarify the confusion once more.

"We are here, conducting this dialogue because we want to keep the public informed," Sixto Donato Macasaet, CODE-NGO executive director, told reporters. "We want to be transparent and honest regarding the conduct of the PEACe Bonds transaction and how the trading gain from the private capital market, is being managed and used for poverty alleviation"

CODE-NGO got an 11- percent net trading gain or P1.4 billion from its agent, RCBC, which bought the PEACe Bonds through a public auction from the government in 2001. After buying the bonds RCBC then sold them to private investors, in which CODE-NGO got P1.4 billion through a special arrangement.
The Arroyo administration, on the other hand, received the full net present value of the 10 year bonds at that time, which was P10.17 billion.

The 1.4 billion trading gain, which are in fact private funds, has since been entrusted as an endowment fund of the Peace and Equity Foundation (PEF), which manages and preserves the fund for poverty alleviation projects.

Former PEF treasurer Senen C. Bacani clarifies that neither PEF nor CODE-NGO has information on how the money generated from the auction of the PEACe bonds was spent as the P10.17 billion went to the government and not to the CODE-NGO network.

"Critics are barking up the wrong tree. CODE-NGO and PEF can explain how the 1.4 billion, a private fund, is being utilized for projects to assist poverty-stricken Filipinos, especially those in the rural areas. But if you want to know how the P10.17 billion government money was spent, it would be best to ask the people who ran the government at that time."

The Times interviewed NGO-beneficiaries that received the money from PEF starting 2001. Many NGOs approached PEF and received either loan or grant or both. Most these are microfinance, water utilities, advocacy enhancements, capability building and other kinds of projects for poor folks.

Consumers reap benefits of ATMs everywhere

Consumers reap benefits of ATMs everywhere

ENCASH Network Services, the country’s first Independent ATM Deployer (IAD), and MASS-SPECC Cooperative Development Center, a Mindanao-wide federation of cooperatives, hold the distinction of being the first MegaLink non-bank members. As affiliate network members, they are rapidly extending MegaLink ATM convenience to previously unreached markets.

Both institutions help MegaLink fulfill its aim of bringing banking to where people need it most. Whether its distance, lack of infrastructure or costs that hinder the deployment of ATMs, MegaLink is rising to the challenge.

Initial services available are standards such as balance inquiries, withdrawals, cash advance and fast cash. Bills payment and the standard MegaLink POS service, which will allow an ATM cardholder to pay through MegaLink POS terminals in certain establishments, will soon be made available to those new members.

Among rural banks, ENCASH’s connection with MegaLink meant more than just distinction. Their local banking publics embraced the services, and partner rural bank operations have significantly improved. With an initial network of 6 ATMs, ENCASH started operations on the 16th of December 2007. Reflecting its wide acceptance in the market, the fast-growing network ended April 2008 with an installed base of 61 ATMs, all using the PLDT Shops Work UnPlugged (SWUP) wireless data communication service. Within the next quarter, ENCASH expects to receive the balance of their first 100 ATMs from suppliers.

Bank of Florida, a charter member of the Pampanga Federation of Rural Banks, and listed as one of the top rural banks in the country, has felt the warm acceptance of clients of their first ATM. In terms of resources among rural banks, the Philippine Deposit Insurance Corporation has listed Bank of Florida second in Pampanga, fourth in the region and 20th in the country.

Bank of Florida client Robin A. De Leon of San Jose, Floridablanca, endured the hassles of commuting just to gain access to his bank account. “Now it’s more accessible and comfortable. I can instantly withdraw cash from the ATM,” De Leon said.

Leny C. Beltran of Paguiruan, Floridablanca complained of the same traffic and sometimes, lack of transportation just to get to an ATM. “But now I save time, and I know the ATM location is safe,” she said.

GM Bank in Nueva Ecija, on the other hand, is a consolidation of Community Rural Bank Inc. (CRBI) and the Muñoz Rural Bank Inc. (MRBI). GM Bank has gained the largest share in Nueva Ecija covering 80% of the market, and is poised to become one of the largest rural banks of Central Luzon.

“It has increased our market share, attracting more clients with the additional global service we provide through the ATM. Our clients have increased in number. Having an ATM has proven our capability to provide banking needs and financial services to our clients in the rural and remote areas. It also provided us with the technological advantage and some prestige,” said Ramon D. De Ocampo, Senior Vice-President of GM Bank, Inc.

Their first ATM in Rizal, Nueva Ecija was placed in the public market. In March this year, GM Bank was awarded a plaque of appreciation from the Rizal LGU for their initiative. The plaque carried the appreciation of its townspeople, and local government officers and employees for contributing to improving their lives. The mayor, vice-mayor and all councilors also issued a memorandum expressing gratitude for GM Bank’s initiative of installing the town’s first ATM.

Joan Salazar, a 26-year old housewife from Pantabangan, Nueva Ecija is grateful for the change. “I go to Cabanatuan City for my ATM transactions, which is located 45 kms from my residence more or less. Because of the distance, it causes a lot of inconvenience and disruption in my everyday activities. Nakakapagod at magastos talaga,” she recalls.

With the new ATM conveniently accessible, Salazar said, “It’s more dependable in case of emergency, and even at nighttime. At the same time I save a lot of money and time. It’s within reach and I don’t have to go to Cabanatuan City.”

Bank client Maricel Dizon lauds the convenience afforded of having a nearby ATM within the community as well. “My bank was far from our place, and it was not safe to travel with cash,” she said. “Now we can easily withdraw our money anytime, and we don’t have to go to the nearby town especially in case of emergency. I feel more secure.”

Among MASS-SPECC members, Oro Integrated Cooperative (OIC) in Cagayan de Oro City, Sta. Catalina MPC with ATM in Antipas, North Cotabato, Paglaum MPC and Sta. Ana MPC are among the first to have established ATM services.

Established in 1966, OIC was the first community type coop in Cagayan de Oro City. From the P88 savings of its 24 founding members, OIC has become sustainable over the years. By yearend 2007, it recorded total assets at P334 million from 26,688 members serviced in 11 branches across Bukidnon and Misamis Oriental. Its Pinoy Coop ATM has stood in service of ATM cardholders like Josefina Clarin, a 68-year old pensioner, and Darryl Macas, 26 of Kauswagan, Cagayan de Oro.

“The Pinoy Coop ATM card is already my second ATM card,” said Clarin. She collects her pension from her account in another bank, but uses the Pinoy Coop ATM card for her savings fund. “I can withdraw anytime I need money for medicines and other personal needs. I’m glad it is now connected to Megalink, so I can have wider access to my funds wherever I am.”

Macas, meantime, is excited over the many benefits of his sole Pinoy Coop ATM card. “It’s very easy and convenient for me to withdraw anytime I want to from the Pinoy Coop ATM, especially now that it’s connected Megalink. I’ll now be able to transact from any Megalink ATM in the country,” he said.

Paglaum MPC on the other hand, owns the first and so far the only ATM in Plaridel, Misamis Occidental. Plaridel lies several kilometers from the capital of Oroquieta City, where the nearest ATMs are found.

“I am so happy that Paglaum MPC now has an ATM,” said Agustina Bugahod of Looc Proper, Plaridel. “This is very helpful now that I don’t have to travel to Oroquieta just to withdraw money sent by a relative through my account. Oroquieta is far from here. It will cost me P60.00 fare, going back and forth.”

Claudia Albarracin of Divisoria, Plaridel feels the same way about having an ATM nearby. “Now I don’t have to ask my nephew to transact for me. If there is an emergency, I can easily make transactions because the ATM is near,” she said.

With the positive feedback received from existing and new cardholders, MegaLink hopes to continue to expand its network by bringing in new members and partners. Through this endeavor, MegaLink hopes to share the convenience of electronic banking through out the country whether cities or countryside.

Megalink to provide ATM services for small banks

Megalink to provide ATM services for small banks
By Doris Dumlao
Philippine Daily Inquirer
First Posted 21:32:00 04/03/2011

MANILA, Philippines—Automated teller machine consortium Megalink has launched a program to provide ATM services for small banks and cooperatives, sparing these niche players from investing heavily in expensive electronic banking platforms.

Using a similar business model adopted by independent ATM providers such as ENCASH, Megalink has agreed to deploy ATM terminals using the labels of small financial institutions. But these terminals will be operated and driven by Megalink.

Such a deal, anchored on a fee-sharing arrangement, was recently sealed with the 16-branch Cooperative Rural Bank of Bulacan (CRBB), Megalink president Benjamin Castillo said in an interview on Saturday.

“We tied up with [CRBB] as part of our advocacy for financial inclusion,” Castillo told the Inquirer.

“These are CRBB-branded ATM terminals located in CRBB branches. (But the ATMs are) operated and driven by Megalink,” he said.

With that arrangement, the small bank is spared from having to invest in technology, while it allows the institution to provide services to clients who want to use the ATM network in central and eastern Bulacan.

Apart from CRBB, MegaLink has also signed up a similar scheme with Maximum Microfinance Savings Bank, which will result in the deployment of Maxbank’s first ATM in Sabang, Puerto Galera, Oriental Mindoro.

Additional ATMs will be rolled out in Calapan in Oriental Mindoro, Batangas City and other strategic sites in Luzon.

Castillo estimated that these institutions would otherwise have to invest anywhere between P2 and P5 million to put up their own ATMs.

Aside from servicing rural banks, MegaLink claims to be the first network to accept nonbanks, and service “unbanked” areas. Its nonbank members include cooperative federations, such as MASS-SPECC and NATCCO, and electronic money issuer G-Cash, a subsidiary of Globe Telecom.

House committee okays bill simplifying corporate taxation

House committee okays bill simplifying corporate taxation

By Paolo Romero (The Philippine Star)
Updated April 04, 2011 12:00 AM

MANILA, Philippines - The House committee on ways and means has approved a bill seeking to simplify the availment of gross income tax for corporations, and which is expected to make tax administration efficient and raise more revenues for the government.

Batangas Rep. Hermilando Mandanas, chairman of the committee and author of House Bill 4361, said the measure would also encourage more corporate taxpayers to file returns.

The bill simplifies corporate income taxation by removing all unattainable requisites in taxing corporations based on gross income.

“Taxpayers need not substantiate and specify all of the allowable deductions which entail tedious compliance and administration process, and is perceived to be susceptible to abuse or manipulation by both taxpayers and tax examiners.

Every item of expense can be subjected to scrutiny as to whether or not such is really a necessary or legitimate expense. This situation greatly erodes the tax base and consequently reduces the government’s tax take,” Mandanas said.

He said the proposal is also consistent with one of the principles of a sound tax system, which is proper and efficient tax administration of the government.

“Its enforcement with the least inconvenience to the taxpayer will be achieved. With this measure, tax administration will be much easier,” he said.

Mandanas said the areas of discretion will be minimized as the tax examiners shall validate only the accuracy of the corporate taxpayer’s gross sale or receipts, and cost of goods sold or cost of services.

“Cost of goods sold is the business expense directly incurred to produce merchandise, while cost of services refers to all direct cost and expenses necessarily incurred to provide services required by the customers and clients,” he said.

Mandanas said the bill would lessen paperwork for both the taxpayer and tax examiner as the substantiation requirement will be significantly reduced.

“More taxpayers will be encouraged to file their returns. And with more taxpayers, tax collection will consequently increase. The gain in terms of improved tax compliance and collection will definitely contribute to the country’s economic stability,” he said.

The bill seeks to amend Section 27 of the National Internal Revenue Code (NIRC) of 1997, as amended, which provides for income tax rates on domestic corporations.

The present law provides that the President, upon recommendation of the Finance Secretary, made effective Jan. 1, 2000; allow corporations the option to be taxed at 15 percent of their gross income after four conditions have been met.

These four conditions are the tax ratio of 20 percent of Gross National Product; ratio of 40 percent of income tax collection to total tax revenues; VAT tax effort of four percent of GNP; and 0.9 percent ratio of the Consolidated Public Sector Financial Position (CPSFP) to GNP.

Mandanas said the bill simplifies corporate income taxation by removing all of these unattainable requisites before a corporation can be taxed based on gross income.

It provides that corporations have the option to be taxed at 18 percent of their gross income. Such choice shall be made at the beginning of the taxable year by information to the Bureau of Internal Revenue (BIR) Commissioner of the taxpayer’s decision to avail himself of gross income taxation. Once the decision has been made, this shall be irrevocable within the taxable year based on the bill.

It further provides that a corporation which is entitled to and is opting for gross income taxation shall not be required to submit with its tax return such financial statements otherwise required under the NIRC. Such corporate taxpayer shall likewise enjoy the benefit of last priority audit.

NAPC shall hold consultations April 6 to 8, 2011

COOPERATIVES INCLUDED: NATIONAL ANTI-POVERTY COUNCIL TO MEET LEADERS OF NINE BASIC SECTORS ON APRIL 6-8, 2011

The National Anti-Poverty Council (NAPC) has slated the second leg of the consultative workshops on April 6-8, 2011 to include leaders from nine (9) additional basic sectors.

These include cooperatives; formal and migrant labor; workers in the informal sector; youth; children; senior citizens; persons with disabilities; victims of disasters and calamities; and non-government organizations.

In a press statement, NAPC Lead Convenor Joel Rocamora, said that the NAPC consultative workshops is the first of its kind connducted by NAPC under the Aquino administration. It aims at generating feedback from the groups represented in NAPC, on the new strategy, and mechanisms for enhancing and institutionalizing basic sector participation in poverty eradication.

Last February, more than 70 leaders of five basic sector organizations participated in the first leg of the 3-day NAPC Basic Sector Consultative Workshop held at Cebu Business Hotel.

This crafting of the government's anti-poverty strategy was participating in by representatives from the basic sectors: farmers; fisherfolk; indigenous people; urban poor; and women.

During said workshop, key sectoral issues and policy concerns were identified as needing urgent attention from the current administration. These included the farmers' demand for a tripartite monitoring mechanism consisting of farmers, the Department of Agrarian Reform and NAPC.

This would ensure the completion of the Comprehensive Agrarian Reform Program by 2014 and the provision of support services for agrarian reform beneficiaries.

Fisherfolk groups pressed for the need to address the issues of resettlement; the completion of fisherfolk registration; and the delineation of municipal waters.

Leaders of indigenous peoples called for a halt in mining operations, which often lead to deforestation, flooding and destruction of ecological systems; the implementation of the IPRA law on ancestral domain; and greater involvement in the government's peace efforts.

Urban poor groups urged for the issuance of an Executive Order declaring a moratorium on demolition and the establishment of Local Housing Boards, which had been part of the 10-point urban poor covenant that Pres. Aquino had pledged to uphold, during the election campaign last year.

For their part, the women's group called for the passage of the Reproductive Health Bill and the full implementation of the Magna Carta for Women. (END)

Lessons from a well-managed co-op

Lessons from a well-managed co-op

By Joey A. Gabieta
Inquirer Visayas

First Posted 19:54:00 04/01/2011

TACLOBAN CITY, Philippines—Public school teacher Teresita Bautista cannot remember how many times she has borrowed money just to make both ends meet.

Before, she would run to a loan shark and close her eyes on the exorbitant interest rates just to solve her immediate need for money.

But now, she and the rest of the 480 teachers of the Leyte National High School (LNHS) no longer have to fall prey to these unscrupulous loan sharks.

They can turn to the LNHS Multi-Purpose Cooperative to help them tide over their financial difficulties at a lower interest rate.

The LNHS-MPC was put up in 1983 by 40 LNHS teachers as a nonlending cooperative to address their basic necessities especially during hard times.

Mini grocery

They contributed P300 each as start-up capital for a mini grocery inside the school. Cooperative members could buy grocery items on credit.

In December 1992, the cooperative decided to go into money lending upon the prodding of then school principal Patria Yutangco in order “to help the teachers on their financial needs,” said Romeo Mobolo, LNHS-MPC chair.

“This way, she told us, we would no longer run to a lending institution which offers exorbitant interest rates,” said Mabolo, 55, one of the original members of the cooperative. He assumed position as chair in February 2008.

At that time, the cooperative had only P30,000 although it was registered with the Cooperatives Development Authority.

The cooperative took Yutangco's advice. It turned out to be a wise business move.

After 28 years, the LNHS-MPC has grown into one of the most established cooperatives in Eastern Visayas with assets of more than P20 million.

It now has 342 members, 50 of them nonteaching personnel of the LNHS.

It also has a credit line of P10 million from the government-owned Land Bank of the Philippines.

But more than anything else, the cooperative has saved the LNHS teachers from loan sharks who took advantage of their financial difficulties.

“Whenever I am in need of money, all I have to do now is visit our cooperative office and apply for a loan,” said Bautista, an English teacher.

Big help

She and husband Jedduh, 57, who works as LNHS supply officer, can barely sustain the needs of their four children, one of them a student of medicine.

Mabolo said he too was a favorite “client” of the cooperative because he had secured several loans just to survive the daily grind.

“The cooperative is really a big help, a blessing to us teachers. It helps somehow to ease our financial burden,” said Mabolo, who has been a teacher at the LNHS for 30 years. He is handling the Teaching and Livelihood Education (TLE) subject.

School principal Miguel Daguinod, 62, said the cooperative has been a big help to the LNHS teachers.

“I myself has benefited from it. I have secured loans at the cooperative countless of times,” Daguinod said.

“Whenever I need money, I don’t have to worry where I will go. All I have to do is apply for a loan at the cooperative and, my financial problem is solved,” he added.

The LNHS-MPC offers an interest rate of two percent per month—lower than the 20-percent interest rate collected by loan sharks to teachers.

The loan is also payable up to 36 months, depending on the loaned amount.

To become a member, an LNHS teacher will have to put up P2,500 in deposit as start-up investment to the cooperative.

Members can avail of educational and hospitalization loans. The cooperative also offers a calamity loan of P10,000 to the families affected by the recent flood in Tacloban City and other areas in the province.

It also offers a kabuhayan (livelihood) loan by as much as P100,000.

The cooperative has a “redeem-a-pawn-policy” that allows the LNHS-MPC to redeem the items pawned by a member. The cooperative charges a two-percent interest on the amount paid to recover the item.

Mabolo said that just like any organization, their cooperative encountered a rough start.

“For one, some of our teachers did not believe that we can survive. Some chose other cooperatives,” he said.

Although they were hurt, he added they opted to move forward. With determination and courage of the members, they were able to succeed.

“Of course, we have to give credit to our members for patronizing the cooperative and for being a good member,” Mabolo said.

He admitted that it never crossed their minds that the cooperative, which ran a small grocery inside the school, would get big.

“It really boosted our morale and changed the lifestyle of some of our members as they would no longer secure loans from the outside offering high interest rates or sell items to their students ...” said Mabolo.

As of now, the cooperative only services the teachers of the LNHS-MPC. But it plans to expand its membership to teachers in other schools in Tacloban and even some parts of Leyte and Samar.

Many teachers in other public schools cannot wait for the LNHS-MPC to expand.

One of them was Lemuel Pagliawan, a science teacher at the San Jose National High School Tacloban, who, this early, said that being a member of the cooperative could indeed help him financially.

Sunday, April 3, 2011

BSP to thrift banks: Adhere to 'good governance' practices

BSP to thrift banks: Adhere to 'good governance' practices
03/23/2011 | 07:53 PM

The Bangko Sentral ng Pilipinas (BSP) on Wednesday urged thrift banks to adhere to “good governance" practices as Banco Filipino Savings and Mortgage Bank has been plagued by controversies regarding its closure.

In a speech delivered at the Chamber of Thrift Banks 2011 Convention, BSP Gov. Amando Tetangco Jr. said thrift banks should be guided by good governance practices “to operate in a safe and sound manner as part of [their] total customer care commitment."

“Let us not forget that banking is imbued with public trust," he added.

Tetangco said thrift banks should streamline their processes to become more efficient, invest more to strengthen the core competencies of bankers, and strengthen their guidelines that protect the public from potential “abuse and malfeasance."

“While our banking sector remains sound and stable, we should not be complacent. The market landscape continues to shift and change… and so should we. Good governance will be the key to long-term sustainable growth," he said.

Last March 17, the BSP ordered the closure of Banco Filipino and placed it under the receivership of the Philippine Deposit Insurance Corp. Bank examiners found out that the thrift bank posted losses averaging P2 billion a year from 2007 to 2009, but mounted to about a monthly loss of P277 million in the first half of 2010.

Educate Filipinos with basic financial information

Thrift banks should not only adhere to good governance practices but also “intensify [their] efforts to educate and empower Filipinos with basic financial information," Tetangco said.

This way, Filipinos will make prudent decisions in saving and growing their money, he added.

“Through responsible and responsive banking, thrift banks can make development truly inclusive," Tetangco also said.

Tetangco pointed out that the major players in the thrift banking industry would continue to play a major role in the country’s economic expansion as it accounts for 10 percent of the banking sector’s deposits, loans, and capital.

“I believe the Philippine thrift banking industry will continue to contribute in keeping our economy on the growth track. I say this on the basis of its track record," he said.

From December 2005 and December 2010, consolidated deposits in thrift banks surged 88 percent to P491 billion while net loans jumped 87 percent to P345 billion, BSP documents showed.

During the five-year period, total assets of the thrift banking industry expanded by 75 percent to record P606 billion.

Its capital also increased 47 percent to an all-time high of P66.8 billion in December 2010. — JE, GMA News

Fin'l institution to manage P2-B ACEF fund

Fin'l institution to manage P2-B ACEF fund

By MELODY M. AGUIBA
March 23, 2011, 12:42am

MANILA, Philippines – The government is considering to transfer the Agricultural Competitiveness Enhancement Fund’s (ACEF) P2-billion balance to a competent financial institution that can efficiently manage it for valid small farmers’ benefit.

A Technical Working Group (TWG) on ACEF has come up with a set of recommendations on how to efficiently release ACEF funds, and transferring it to an expert financing entity, such as a government financial institution (GFI) as Land Bank of the Philippines (LBP), is one of several options raised.

In a presentation before the Congressional Oversight Committee on Agriculture and Fisheries (COCAFM), Senen Bacani, TWG member and a former Department of Agriculture (DA) secretary, said the TWG has chosen rather to give the COCAFM several options on what to do with ACEF rather than give a definite recommendation.

The TWG suggested as an option that government may well choose to remove ACEF under DA's management since DA does not have a core competency on it. Besides, under the Agriculture and Fisheries Modernization Act (AFMA), loan funds previously under DA should be turned over to the Agro-Industry Modernization Credit and Financing Program (AMCFP).

If DA will continue to run the fund in another option, then ACEF guidelines may be changed such as imposing interest on borrowers and requiring a collateral.

However, since the fund is very small compared to the need of small farmers for which ACEF was created, Bacani, also banana exporter La Frutera chairman, said government may just focus loan release to a few targeted industries.

"I think you need to resolve the issue of equity and competitiveness. These must be mixed. You will pour a bigger amount of money for marginalized farmers and fisherfolks for them to really become competitive. Since it's a small amount compared to what the sector needs, focus on a few things and do them well," Bacani said.

He suggested that part of the fund may also be used for those that need a smaller amount to get some boosting. Perhaps this may involve food-producing small and medium enterprises (SME) that may perhaps be nearly capable of exporting. While originally designed for small farmers, ACEF was released to some companies already capable of obtaining commercial bank loans. It so far released P10 billion over 10 years. It still has a balance of P2 billion and expects to receive an additional P8 billion over the next four years until its mandate expires in 2015.

Francis N. Pangilinan, COCAFM chairman, said government may also seriously consider transforming ACEF simply into a grant fund as suggested by other COCAFM members. Perhaps making it a seed fund for microfinancing is another move. "I think the inclination so far is to veer away from lending and focus on grants. The other option is to go through the formal banking institution, but with a bias for microfinance. So microfinance is one other opportunity that we should look into," Pangilinan said in an interview.

BSP deadline to reclassify OBOs looms

Posted on March 30, 2011 09:06:09 PM

BSP deadline to reclassify OBOs looms

THE CENTRAL bank has reminded banks of an April 15 deadline to reclassify their “other banking offices” (OBOs), otherwise these offices will be classified as regular OBOs that can do only non-transactional activities.
The Bangko Sentral ng Pilipinas (BSP) issued Memorandum No. 19 dated March 29, 2011 that stated “banks are given up to 15 April 2011 to declare to the BSP the desired classification of their existing OBOs, otherwise, unclassified OBOs shall be automatically classified as regular OBOs after the said date.”

Last October 14, the BSP issued Circular No. 694 that allowed banks to reclassify OBOs into microfinance-oriented OBO (MF-OBO) or microbanking office (MBO), which primarily cater to microfinance clients or overseas Filipinos and their families.

BSP Deputy Gov. Nestor A. Espenilla Jr. in a text message yesterday said regular OBOs are bank offices that are limited to non-financial transactions such as marketing, customer care services, information dissemination and acceptance of loan applications, among others.

MF-OBOs or MBOs, on the other hand, are authorized to accept microdeposits; extend microloans; sell microinsurance products; receive and disburse remittances; collect premiums for the Social Security System, Government Service Insurance System and other social security institutions; disburse the benefits under the government’s conditional cash transfer program; accept utility payments; and purchase foreign exchange.

The move allowing banks to reclassify OBOs into MF-OBOs or MBOs or to set up such offices was intended to allow banks to reach the unbanked without setting up branch offices, which would be costly.

Many banks have signified interest in setting up MF-OBOs or MBOs, Mr. Espenilla said.

“Following the issuance of [Circular 694 in late 2010], 39 banks have applied, representing 486 that are for conversion from OBO to MBOs, 43 are for new MBOs,” Mr. Espenilla said in a text message.

“Over 280 have been approved while others are in the evaluation pipeline.”

In a phone interview with BusinessWorld yesterday, BPI Globe BanKo President Teresita B. Tan said BanKO plans to apply for 17 MBOs this year, but “plans have yet to be finalized next month in our board meeting.”

Data from the BSP Supervisory Data Center (SDC) showed that as of end-December, there were 709 OBOs, up from 679 OBOs in 2009. -- Ann Rozainne R. Gregorio

Saturday, April 2, 2011

Rural bankers train in microinsurance

Rural bankers train in microinsurance

PERSONNEL of 17 rural banks have undergone training with the Rural Bankers Association of the Philippines (RBAP) to become licensed microinsurance providers, while those of 11 insurance companies have agreed to join in as well.

"We have already conducted two batches of training this year and we are planning to launch more training modules," RBAP President Corazon L. Miller said in a phone interview yesterday.

RBAP, in cooperation with the Rural Bankers Research and Development Foundation, Inc. and the Microenterprise Access to Banking Services, has been helping rural banks become licensed to market, sell and service microinsurance products by giving their executives and staff the training required by the Insurance Commission (IC).
Last month, the IC exempted microinsurance agents from the required regular licensure examination for insurance agents, in a bid to get the products distributed by more people.

These agents will have to undergo only an approved and prescribed microinsurance training course and pass the qualifying examination at the end.

National Credit Council Deputy Executive Director Joselito S. Almario confirmed that the bank personnel who completed the RBAP training could now be licensed by the IC to become agents.

"RBAP has long been waiting for the IC circular on the licensing of microinsurance agents," he said. "They were always interested in becoming delivery channels to bring microinsurance to the provinces."

Ms. Miller said that microinsurance complements the products offered by rural banks because it provides risk protection for small borrowers. "If the bread winner dies in the family, the debt will be passed on to the other members. And even if it’s not the bread winner, the costs of burial are so expensive, that the family could default on its loans," she explained. "If they have life insurance, they could have a financial backup."

Microinsurance would also provide the low-income sector with an affordable means to get benefits for accidents and hospitalization, since premiums -- when computed on a daily basis -- cannot exceed 5% of the current daily minimum wage rate of non-agricultural workers in Metro Manila, Ms. Miller said.

The next step now is for the IC to release guidelines on how to become a microinsurance broker, Mr. Almario said. Agents are limited to representing one life insurance company and seven non-life companies.

But rural banks want to be able to offer many options to their customers, he added
RBAP raised the issue with the IC during the Microinsurance Roundtable Discussion last Tuesday, and Deputy Insurance Commissioner Vida T. Chiong said the regulator would try to release a circular on microinsurance brokers by next month, Mr. Almario said. -- Diane Claire J. Jiao

Mid-term financial sector dev't plan to focus on credit and savings policy

Mid-term financial sector dev't plan to focus on credit and savings policy

By LEE C. CHIPONGIAN

April 2, 2011, 12:08am

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) has finalized review of the proposed draft of the five-year financial sector development in the 2011-2016 Medium-Term Philippine Development Plan, which focused more on the "evolving needs" of the financial system after 2016.

Based on the draft document, which is a chapter on the financial development in the MPDP, the aim is to further deepen the financial system through a "balanced development of the domestic banking system and capital market."

The BSP said the focus is on creating a "conducive policy and regulatory environment" as well as to progressively adopt international standards and best practices, good governance and transparency for the effective delivery of financial services.

The key reform objectives in the MPDP financial sector plan includes defining a clear credit policy and credit delivery strategy, the promotion of savings generation at a regional level but institutionalize deployment of resources at national level and to develop an enabling environment for long-term savings.

Other major reforms included in the five-year financial sector development plans are strengthening the governance framework of the financial system in line with international standards and best practices, as well as establish a strong legal framework for financial sector development.

In a statement released in January, BSP said 2010 was a banner year for financial inclusion or a system providing access to financial services. Last year, because of several new measures to enhance financial inclusion, services were extended to the traditionally unserved or underserved market.

"The BSP recognizes that financial inclusion is a worthy policy objective and is something that can be pursued alongside the promotion of stability and efficiency in the financial system," said the BSP. At the end of 2010, about 37 percent of local municipalities are still unbanked and lack financial services.

The new BSP issuances have focused on a wide range of areas including expanding products and services that can be offered by banks to service the varying needs of the market, widening access points where financial services can be delivered, developing the market infrastructure to increase transparency and competition in the industry, promoting innovation to encourage growth in scale and increases in efficiency, and addressing existing barriers that hinder the access to finance by the unserved and underserved market.

"All in all, the issuances build the framework for an inclusive financial system that can service the needs of all markets in an effective, efficient and sustainable manner," said the BSP.

One of the more important issuances was providing new products such as housing microfinance, micro-agri loans, microinsurance and micro-deposits. Last year there were 200 banks that were active in microfinance and they have served 883,863 clients and provided total loans amounting to P6.4 billion and generating savings of P3 billion.

The BSP also expanded banks' network by allowing the establishment of micro-banking offices or MBOs. "Through these MBOs, the usual barriers of cost and distance can be addressed and people who have been deprived of a face-to-face banking presence in their areas need not travel far to be able to save, pay their loans or make simple financial transactions," said the BSP.

Thrift banks post high growth

March 23, 2011 10:18:08 PM

Thrift banks post high growth

WHILE THRIFT banks grew robustly in the past five years, the central bank said reforms are needed to make them stronger institutions.

“[D]eposits and loans of the thrift banking industry are at historic high levels,” Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. said during his speech at the national convention of the Chamber of Thrift Banks (CTB) yesterday.

Consolidated deposits rose by 88% to P491 billion as of Dec. 2010 compared to Dec. 2005 while net loans increased by 87% to P345 billion during the same period.

Assets grew by 75% to a record-high P606 billion, while the industry’s capital rose by 47% to P66.8 billion, also a record-high.

“[These] figures are well and good,” Mr. Tetangco remarked.

“I believe the Philippine thrift banking industry will continue to contribute in keeping our economy on the growth track. I say this on the basis of its track record [for the past five years],” he added.

Mr. Tetangco, however, stressed that thrift banks need to continue pursuing reforms so they become better and stronger institutions.

He emphasized “total customer care commitment,” which is achieved through good governance and operating in a “safe and sound manner.”

“While our banking sector remains sound and stable, we should not be complacent. The market landscape continues to shift and change and so should we. And at all times, good governance will be the key to long-term sustainable growth,” Mr. Tetangco said.

In a bid to create stronger institutions, the central bank issued new rules on March 1 that raised the capital requirement for new thrift banks.

Thrift banks that locate their head offices in Metro Manila, for instance, must have a minimum capital requirement of P1 billion instead of P325 million while those in Cebu and Davao, are required to have P500 million instead of P52 million.

In response, CTB and HSBC Savings Bank (Philippines), Inc. President Patrick D. Cheng, in an interview with BusinessWorld said, “we want to maintain our growth path for the past five years.”

He said a “high” single-digit growth is achievable as a double-digit growth will be “difficult.”

Mr. Cheng said new thrift banks might find it hard to comply with the central banks’ new capitalization rules but the “CTB supports the new requirements as capital is the foundation of banks.”

CTB groups 54 of the country’s thrift banks. -- Ann Rozainne R. Gregorio

BSP allows thrift banks to invest in foreign currency-denominated debt papers

BSP allows thrift banks to invest in foreign currency-denominated debt papers
01/02/2011 | 09:28 PM

The Bangko Sentral ng Pilipinas (BSP) has given thrift banks the green light to invest in foreign currency-denominated debt papers that are readily available in the market.

The policy-setting Monetary Board has approved the guidelines allowing various thrift banks to engage in the business of investing in debt papers denominated in foreign currency, the BSP said in a statement Sunday.

Prior to this, only the regular commercial banks and the big universal banks were allowed to invest in foreign currency-denominated debt papers.

The BSP said it wants to "liberalize the rules and regulation on foreign exchange transactions" due to the heavy inflow of foreign capital into emerging markets like the Philippines.

The influx of foreign capital has already boosted the country's gross international reserves to some $61 billion and pushed the balance of payments into surplus, the central bank said.

Under the guidelines, the BSP noted that thrift banks may invest in foreign currency-denominated debt securities "except debt papers that were restructured during the period of moratorium in the payment of external debt" in 1980s.

"Thrift banks shall invest in readily marketable foreign currency-denominated debt securities in the regular banking unit books and shall be subject to risk management guidelines," the BSP said.

Readily marketable foreign currency-denominated debt securities refer to foreign currency-denominated debt securities that are quoted in an active market, with prices that are readily and regularly available from an exchange, dealer, or broker, the central bank explained.

BSP Gov. Amando Tetangco Jr. has often been asked what other foreign exchange liberalization measures the central bank is planning to implement to dampen the impact of sustained foreign exchange inflows.

There are speculations that a new liberalization measure may be in the offing as the BSP cannot at this point afford to make adjustments in its policy rates either way.

Tetangco said the BSP has an "enhanced monetary tool kit" at its disposal that allows the authorities to respond to the challenges posed by elevated foreign inflows without resorting to adjustments in the current monetary policy settings. – JE/KBK, GMANews.TV

Wednesday, March 30, 2011

PNB, Bank of China tie up in handling remittances

PNB, Bank of China tie up in handling remittances

Philippine National Bank (PNB), the country’s seventh largest bank in terms of assets, has signed an agreement with the Bank of China (BOC) in handling remittances of Chinese nationals who are based in Italy. PNB’s tie-up with BOC expands the market coverage PNB Italy SpA, which was established primarily to facilitate remittances of Filipinos who are in Italy.

PNB, acknowledging the significance of the signed deal, said that there are about 745,000 Chinese overseas contract workers in Italy at present and therefore the agreement a real expansion in their market. 2008 remittances to China reached $24 billion, according to data from World Bank.

In their agreement, remittances of Chinese nationals could be coursed through PNB who will in turn transfer the money to a BOC account, through the latter’s Manila office or any other bank accounts of the remitters’ beneficiaries.

Aside from its tie-up with BOC, PNB said it is still looking to establish more strategic partnership to expand its non-Filipino remittance business, particularly in Europe.

PNB claims to have the widest international footprint among local banks. It has a network comprising 110 branches, offices and subsidiaries spread across the Asia-Pacific region, North America, Europe and the Middle East.

Its remittances for 2008 reached about $2.6 billion, which accounts for 16 percent of total remittances handled by local banks. PNB ranked third in terms of remittance volume, competing aggressively with Banco de Oro and Bank of the Philippine Islands.

Tuesday, March 29, 2011

BSP: Only certified banks can engage in microfinance

BSP: Only certified banks can engage in microfinance

MONDAY, 28 MARCH 2011 20:13 JUN VALLECERA / REPORTER

NOT just any bank may engage in the business of extending so-called micro loans to small borrowers as the privilege is and shall remain a regulated activity, the Bangko Sentral ng Pilipinas said on Monday.

Deputy BSP Gov. Nestor Espenilla Jr. stressed this point in the BSP’s latest communications to the banks in which he emphasized only those properly trained and documented may engage in it.

“This is to remind that only authorized banks are allowed to engage in the presentation, marketing, sale and servicing of microinsurance products,” Espenilla said.

According to him, banks may act as a microinsurance agent only from authorized insurance providers duly recognized by the Insurance Commission.

As agent, only those banks passing a qualifying exam and prescribed training course may engage in the business and the bank’s articles of incorporation must be amended to reflect this fact.

“In view of the latter requirement, applicant banks shall amend their articles of incorporation by including a secondary purpose of acting as a microinsurance agent and shall submit simultaneously the amended AOI to the appropriate BSP office and the Insurance Commission,” he said.

Only after the requirements have been complied with in full will the BSP issue its approval in the form of a “No Objection” notice.

“This ‘No Objection’ notice, together with other requirements, shall serve as the basis for the IC to issue the appropriate license to the applicant bank. However, the licensed bank shall submit the approved amended AOI on or before June 30, 2012; otherwise, the license shall no longer be renewed,” Espenilla stressed.

He also said the “unauthorized conduct of microinsurance as well as other insurance-related activities shall subject a bank and/or the responsible directors and/or officers of the bank to the applicable sanctions and/or penalties under existing banking laws, rules and regulations.”

The microinsurance program, which involves loans as small as P5,000 per borrower, is an important advocacy program started by then BSP Gov. Rafael Buenaventura that current BSP Gov. Amando M. Tetangco Jr. has conscientiously pursued.

It is a highly regulated activity mainly because it affects the financial welfare of small borrowers whose trust and confidence in the system forms the bedrock of banking, especially in the countryside.

GM Bank, Globe promote growth of SME sector

GM Bank, Globe promote growth of SME sector

Friday, March 25, 2011

AS IT continues to push its expansion this year, GM Bank is looking for ways to enhance the small and medium-sized enterprises' (SME) access to financing to support their growth.

Tomas S. Gomez IV, GM Bank president and chief executive officer, said access to investment funds is a critical challenge for SMEs anywhere in the world, most especially in the Philippines.

"Typically, collateral is a barrier. So we are investing in time and effort and resources in changing the way we provide financial resources or loan resources to SMEs. Such that by understanding them better, their strengths, the challenges that they face, we are able to provide superior financing products for their needs," Gomez said.

GM Bank is raising P40 million worth of Tier 1 capital and is increasing its branches this year. It has 35 branches today and operates in five provinces. It employs 700 people and GM Bank will continue to grow this year.

Given its expansion, to optimize its operations and serve its clients better GM Bank utilizes business solutions that have been customized to its specific needs.

The bank communicates with its employees through TxtConnect, a text broadcast service that could send messages to thousands of pre-registered recipients.

TxtConnect can be used not only to employees but also to customers to announce a sale, market new products, or send info to employees and save costs on calls.

It also uses the GCash platform for mobile banking so clients can do remittance, payments, text a deposit, and text a withdrawal using their Globe phones. All GM Bank employees receive all or a part of their salaries through GCash as well.

"Challenges to our business are all related to how to manage growth. Because when you are growing at a very fast clip year on year, there are challenges on how you maintain growth. There are many products and services that we are offering today that we will not be able to offer if we did not have the benefit of making the right investments in technology. It's not just the hardware, it's not just the software, it's also the communication link, it's also the people," Gomez said.

Gomez said making the right investments in technology does not necessarily entail purchasing it.

He said the best way is to partner with a technology solutions provider with the capability, such as Globe Business.

Globe Business, the enterprise, corporate and SME client servicing unit of Globe Telecom, provides solutions especially designed for SMEs that they customize suited to their specific requirements.

Published in the Sun.Star Davao newspaper on March 26, 2011.