The BSP is encouraging microfinance institutions to pursue digital finance for MSMEs.
BSP — The Bangko Sentral ng Pilipinas is encouraging more microfinance institutions to pursue digital finance for agriculture and for micro, small, and medium enterprises (MSMEs).
There are 144 microfinance institutions (MFIs) serving 2 million borrowers with a combined PHP 26 billion in loans as of end-September 2021.
Microfinance institutions are crucial in promoting financial inclusion in the countryside as about 67% of MFI borrowers are in rural areas, while 33% are in urban locations. In terms of income class, 50% are in the “E” class, while 46% of borrowers are in the “D” class — both are in the low-income groups.
During his weekly press briefing, BSP Governor Benjamin Diokno has been calling on the industry to work on improving technical assistance and funding support through collaboration.
“We have priority initiatives to promote inclusive digital finance and enhance the agriculture and MSME financing ecosystem under the National Strategy for Financial Inclusion (NSFI) 2022-2028,” Diokno said. “In line with this, we are encouraging development partners and experts to continue extending technical assistance that will build the capacities and provide opportunities for MFIs to adopt digital innovations.”
According to the BSP chief, industry collaboration is instrumental in the establishment of shared digital platforms or facilities among microfinance institutions to “create a multiplier effect on the microfinance sector”.
Diokno also said that the central bank “supports strategic initiatives” — including matching grants and guarantee mechanisms — that will foster continued funding support for microfinance institutions to boost their lending activities.
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He is also urging microfinance institutions to explore digital innovations under the central bank’s Digital Payments Transformation Roadmap.
The roadmap, based on a report on Manila Bulletin, envisions 70% of Filipino adults owning a transaction account and at least 50% of transactions done digitally by 2023.
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