Philippines: Bill Creates Microfinance Regulator

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Aug 2015
Philippines, August, 10 2015 - A measure creating a regulatory body for microfinance nongovernment organizations (NGOs) was passed by the Senate on third and final reading on Monday.

Once enacted, Senate Bill 2752, also known as the Microfinance NGOs Act, will establish the Microfinance NGO Regulatory Council, which will be created by the Securities and Exchange Commission (SEC).

The council will institute and operationalize a system of registration, licensing and accreditation for microfinance NGOs, issue certifications, monitor their performance, require submission of reports, collect reasonable accreditation and monitoring fees, and submit annual reports to the President of the Philippines and to Congress, the bill said. Upon its creation, the council will also have the power to suspend microfinance NGOs.

For their part, microfinance NGOS are mandated to “seek accreditation from the Council as a prerequisite for engaging in the practice of microfinance in the Philippines.”

The proposed law defines microfinance as “viable and sustainable provision of a broad range of financial services to poor/unbanked/financially underserved/low-income households engaged in livelihood and microenterprise activities.”

Meanwhile, Microfinance NGOs are defined as “duly registered nonstock, nonprofit organizations with the primary purpose of implementing a micro enterprise development strategy and providing microfinance programs, products and services, such as, but not limited to, microcredit and microsavings.”

Once the bill becomes law, duly-accredited microfinance NGOs “shall not be subject to any government taxes and fees imposed under the Internal Revenue Laws and other tax laws,” the bill said. It also recognizes “the vital role of Microfinance NGOs in addressing poverty at the grassroots, increasing self-reliance among the poor, and expanding opportunities for them toward improving their quality of life, thereby making them distinct and different from the traditional/formal financial intermediaries and other nonbank financial institutions.”

Donations to the microfinance NGOs would be deductible from the donors’ gross incomes and donations will be exempted from donor’s tax. “The approval was a victory for all microfinance NGOs, which, for decades now, have been helping the government’s poverty alleviation program without getting anything in return. The passage of this measure is recognition of their crucial role in lifting our fellow Filipinos from poverty and enabling the poor to build their own businesses and create their own sustainable livelihood,” Senator Paolo Benigno “Bam” A. Aquino IV, the bill’s sponsor, said in a statement. Mr. Aquino also chairs the Senate committee on trade, commerce, and entrepreneurship.

For his part, Senate President Franklin M. Drilon said the bill would help push government efforts for genuine inclusive growth across all socioeconomic sectors, “by empowering even underprivileged Filipinos to tap into our glowing economic situation, thus helping them improve their lives.”



 

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