Category: Microfinance

Community Rural Bank of Catmon, Inc. (CRBC), with the assistance of Social Enterprise Development Partnerships, Inc. (SEDPI) recently established its own Delinquency Management (DQ) task force as a way to strengthen its crusade to manage its delinquent accounts.

During the Cebu leg of SEDPI’s Technical and Mentoring Assistance (TAMA) tour in Visayas and Mindanao last November 14, CRBC and SEDPI jointly conducted a technical mentoring and process mapping workshop to identify and establish operational standards and strengthen the bank as a microfinance institution. It was also in this workshop that CRBC introduced its own DQ task force team.

Delinquency Management is a microfinance institution’s comprehensive plan to manage and lessen its delinquent loan borrowers. It is important to manage the delinquent accounts to protect the bank’s portfolio and also ensure institutional growth. The DQ Task Force is a team established to monitor and manage delinquency among its loan borrowers.

CRBC is SEDPI’s newest MFI TAMA partner. It is a rural bank established in 1973, headquartered in Catmon town and has 4 branches in different towns in Cebu. T o date, SEDPI and CRBC partnership continuously grow as more joint programs will be established, which includes establishing a training hub in Cebu.

To know more about SEDPI’s technical and mentoring assistance partnership, you may visit www.sedpi.com or email info@sedpi.com

During the recent Rural Banker’s Association of the Philippines (RBAP) Annual Convention,  Bangko Sentral ng Pilipinas (BSP) hailed Katipunan Bank (KB) as best practice in terms of past due with a rate of 2.3%. This arduous feat in the microfinance industry is a manifestation that the rural bank has come a long way since its establishment 32 years ago.

With more than three decades of working tirelessly to uplift the economic condition of communities in Zamboanga Del Norte, Katipunan Bank is now reaping the rewards of the organization’s dynamism and aggressiveness.  From its humble beginnings with only four employees, the organization is now home to 416 staff and over 41,000 clients. In 1997, BSP allowed Katipunan Bank to open its first branch in Dipolog City and eventually purchased Plaza Rural Bank in 2001, making it its first subsidiary company.  As Katipunan Bank compellingly strives to participate in poverty reduction and women empowerment, it launched its microfinance program in 2003. The program aims to provide financial assistance to the poor sector in Zamboanga del Norte.

Due to the rapid growth of the organization primarily brought by its widely received microfinance program, Katipunan Bank decided to seek assistance from other organizations that would enable them to competently adapt to changes. As a result, KB sought the assistance of Social Enterprise Development Partnerships, Inc. (SEDPI) in 2008 to facilitate and craft its strategic plan. The 5-year strategic plan provided KB with revitalized strategies to strengthen its operation.  These strategies include market protection strategies, market expansion, resource mobilization, product innovation, and organizational development strategies.

In 2010, SEDPI and Katipunan Bank renewed its partnership through the SEDPI-Katipunan Bank Microfinance Strategic Partnership Innovation. The partnership established Katipunan Bank as a training hub of Ateneo De Manila University Microfinance Capacity Building Program. By establishing Katipunan Bank as a training hub in Mindanao, capacity building through trainings is brought closer to microfinance players in the area. To date, a total of nine trainings were already conducted, from which hundreds of practitioners have benefitted.

These milestones are just a few that Katipunan Bank achieved through the years. The organization also received recognition for its efforts in gender development and employee welfare. In the coming years, Katipunan Bank will continue its pursuit as a development catalyst through maintaining a balance in its financial and social mission.

Mr. Edwin Salonga is one of the nine (9) selected speakers at the international conference on Global Partnerships in Microfinance. The conference is organized by the University of Greenwich, in collaboration with the University of Birmingham and Burgundy School of Business. Mr. Salonga is the Chief Executive Officer (CEO) of the Social Enterprise Development Partnerships, Inc. (SEDPI) and a concurrent lecturer at the Ateneo de Manila University’s Development Studies Program.

The conference held on 6-7 September 2010 at the University of Greenwich in London. Her Royal Highness Princess Máxima of the Netherlands was the guest speaker. The conference intends to look at all potential partnerships in microfinance and to discuss their accomplishments in meeting the microfinance goals. The conference will focus on the following topics a) Strategic Partnerships; b) Enhance New Partnerships; c) The Role of Institutions Involved; d) Collaborative Relations; and e) Global versus Local Partnerships.

The paper of Mr. Salonga is entitled “Fund Guarantees with Clear Exit Strategy: Donors Building the Confidence of Commercial Banks in Funding Microfinance Institutions.” It delves on how the partnership of international donor agencies and commercial banks may support the operations of microfinance institutions (MFIs). One of the major challenges of MFIs is access to commercial funds to increase their loan portfolio, which in turn will be utilized to carry out their mission to reach out to more poor people. However, commercial banks view microfinance as a risky investment due to the traditional banking approach they are more familiar with. It is in this context that international donors at present establish partnerships with commercial banks to build the confidence of the latter on microfinance through a risk-sharing mechanism by virtue of fund guarantees. It is through this scheme that a portion of the funds released by commercial banks to MFIs is guaranteed by the donors. In case that the MFIs fail to pay off their loans to the commercial banks, the respective donors would cover such payments. The challenge however for the donors is to map out a clear exit strategy, in terms of timeframe or milestones, that the MFIs need to observe as this guarantee scheme is a financial intervention that will have to be discontinued over time.

SEDPI Capital Credit, Inc. (SCCI) was able to obtain a total of PhP73 million loan facility from BPI-Globa BanKO and Cordaid last September. BanKO increased its credit line to SCCI from PhP15 million to PhP50 million while Cordaid increased its loan exposure from PhP10 million to PhP13 million.

Through the increased loan facility, SCCI is poised to almost quadruple its loan portfolio from PhP28 million to PhP100 million by the end of 2010. It is optimistic the projection would be reached due to the strong demand of microfinance institutions for wholesale loans. Edwin Salonga, SCCI’s Chief Executive Officer, says it would need another PhP50 million in fresh just to satisfy the current demand of its existing clients.

Net income is projected to be higher than 2009 due to the increase in loan portfolio while operating expenses are expected to remain flat. SCCI maintains its stellar portfolio quality. The company has not experienced any delinquency since its inception. As such, it continues to enjoy the support of funding agencies and OFW investors. As of September 2010, SCCI has a loan portfolio of PhP75 million.

In an effort to improve its accounting system and boost transparency to the public, SCCI engaged SGV & Co. as its external auditor. SGV & Co. is an affiliate of Ernst and Young and is known as the leader in auditing in the Philippines.

SCCI is the financing arm of the Social Enterprise Development Partnerships, Inc. (SEDPI). It provides wholesale loans to small and emerging microfinance institutions and social enterprises.

A total of 15 participants coming from several microfinance institutions in Northern Luzon attended the “Fundamentals and Methodologies of Microfinance” training held at the Nueva Segovia Cosortium of Cooperatives in Vigan, Ilocos Sur on January 28-30. The training is the first offering for 2008 of the Ateneo-BPI Partnership to provide capacity building services to microfinance stakeholders.

The participants gave the training resource persons a rating of 4.75 out of a highest possible score of 5.00. A participant from the Santo Domingo Development Cooperative said that “the topics were all delivered very well and the training is really of great help to our organization.”
In 2006, the Bank of the Philippine Islands and the Ateneo de Manila University started a pioneering partnership to build the capacity of microfinance institutions. The partnership aims to upgrade the technical capacity of microfinance institutions to enable them to absorb greater amount of funds used to reach out to a greater number of poor people; and provide immediately applicable tools to microfinance institutions for better implementation and operational policies. The partnership has two components. These are the conduct of regional trainings in pre-selected key cities within the Philippines; and facilitate the access of microfinance institutions to BPI’s capacity building loan.

Since the inception of the partnership, the trainings held in key cities of the Philippines were able to reach out to 88 microfinance institutions attended by 217 participants. An average of 20 participants attended the trainings.

To usher the new year, SEDPI conducted a five-day study tour entitled “Microfinance Immersion: A Study Tour of the Philippine Microfinance Industry” for Nigerian government agencies. The government agencies come from the Central Bank of Nigeria, Nigerian Deposit and Insurance Corporation, Ministry of Finance, and the National Association of Small and Medium Enterprises.

The participants visited five organizations that represent the various players in the Philippine microfinance industry – Bank of the Philippine Islands, Inner City Development Cooperative, People’s Crdit and Finance Corporation, Peace and Equity Foundation, and Siargao Bank.
The participants visited the headquarters of the Bank of the Philippine Islands where they were greeted by Mr. Josais dela Cruz, Vice-President for BPI’s microfinance unit. Mr. dela Cruz presented to the participants how BPI started its wholesale loan and capacity building loan for microfinance institution. He also presented different guarantee schemes that BPI has used in partnership with other foreign banks to secure the wholesale loans for microfinance. After visiting BPI, the participants visited Inner City Development Cooperative to learn more about how microfinance provides the grassroots access to financial services. They went on field to interview the management staff of the cooperative as well as interact with microfinance clients.

The associate director of the Peace and Equity Foundation, Mr. Ric Torres, presented to the Nigerians the various strategies and projects that the foundation used to reduce poverty using microfinance as one of the components. The President of the People’s Credit and Finance Corporation also interacted with the participants with the end view of sharing how the Nigerian government could set up a fund for microfinance institutions by sharing the Philippine experience. Ms. Lucille Sering, Vice-President of Siargao Bank, also shared her successes and challenges in running a microfinance program in the rural area.

Overall, the participants were pleased with the study tour and remarked that they have seen a lot of strategies that they could emulate back in Nigeria.