The Monetary Board of the Bangko Sentral ng Pilipinas (BSP), the central bank of the Philippines, recently released a circular amending the minimum requirements for banks offering micro-agri loans [1]. In an effort to ensure that banks offering micro-agri loans have adequate financial capacity, managerial and technical capabilities to offer the product, BSP now requires that the banks must have a CAMELS rating of at least 3, a management score of at least 3 and a capital adequacy ratio of at least 12 percent. (CAMELS ratings assess a bank’s overall condition through an evaluation of the following components: Capital, Asset quality, Management, Earnings, Liquidity and Sensitivity to market risk.) In addition, the banks must not be under the “Prompt Corrective Action Program,” which addresses capitalization problems or other concerns. Banks must also have no arrearages on their microfinance-related borrowings from the central bank or other creditors. [2]
Micro-agri loans are short-term loans with tenor of up to 12 months and weekly, semi-monthly or monthly payment terms. The loans, which have a cap of PHP 150,000 (USD 3,500), are used primarily for farm activities, agri-business or agriculture-related fixed assets. Loans are granted to borrowers who have engaged in farm activities for at least two years but also have non-farm income. [2].
Since 2007, when micro-agri loans were introduced through a three-year testing phase, banks reportedly have lent approximately PHP 500 million (USD 11.7 million) in micro-agri loans [1].
By Kristha Abores, Research Associate
About Bangko Sentral ng Pilipinas (BSP):
Bangko Sentral ng Pilipinas (BSP) is the central bank of the Republic of the Philippines. Established under the provisions of the New Central Bank Act of 1993, BSP is headquartered in Manila and has three regional offices performing cash operations and eighteen branch offices. BSP participates in various advocacy programs concerning microfinance, financial education and consumer protection.
Sources and Additional Resources:
[1] Manila Bulletin: “BSP Tightens Rules On Micro-Agri Loans Of All Banks,” http://www.mb.com.ph/articles/351644/bsp-tightens-rules-on-microagri-loa…
[2] BSP Circular No. 748, http://www.bsp.gov.ph/downloads/regulations/attachments/2012/c748.pdf
MicroCapital.org article, January 25, 2012, “MICROCAPITAL BRIEF: Bangko Sentral ng Pilipinas (BSP) Reports 198 Banks Have Lent $165m to 964k Borrowers in the Philippines,” https://www.microcapital.org/microcapital-brief-bangko-sentral-ng-pilipin…
MicroCapital.org article, January 18, 2012, “MICROCAPITAL BRIEF: Bangko Sentral ng Pilipinas (BSP) Doubles Microfinance Loan Ceiling to USD 6,835, BPI Globe BanKO to Provide Micro-Agri Loans to Farmers in the Philippines,” https://www.microcapital.org/microcapital-brief-bangko-sentral-ng-pilipin…
MicroCapital.org article, February 2, 2010, “MICROCAPITAL BRIEF: The Bangko Sentral ng Pilipinas (BSP) Adopts New Rules to Ease Loan Access for Small Farmers,” https://www.microcapital.org/microcapital-brief-the-bangko-sentral-ng-pil…
MicroCapital Universe Profile: Bangko Sentral ng Pilipinas (BSP), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Ban…
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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