Philippines: Microfinance institutions can facilitate remittances

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Jun 2008
Philippines, June, 15 2008 - Lately, money transfer agent PetNet Inc. has decided to tap microfinance institutions to expand its remittance market.

Microfinance refers to the provision of financial services to low-income clients, including the self-employed. It also refers to a movement that envisions “a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit, but also savings, insurance, and fund transfers.”

Microfinance institutions can take the form of cooperatives and other self-help groups, rural banks, and small economic formations. They are now emerging as remittance channels and can effectively play this role, as they are present in many rural areas and poor people’s enclaves.

Lately, money transfer agent PetNet Inc. has decided to tap microfinance institutions to expand its remittance market.

Lorenzo T. Ocampo, PetNet president, said PetNet has partnered with microfinance institution Alalay Sa Kaunlaran, Inc. (ASKI) to widen its market in Regions 1, 2 and 3 that ASKI covers.

“In the partnership, Aski’s clients can remit through PetNet. These areas are underserved,” Ocampo told reporters.

PetNet signed on Wednesday a memorandum of agreement (MOA) with ASKI. Under the partnership, ASKI’s clients may channel its remittances through PetNet.

ASKI has 21 branches in the three regions, all of which are areas with high demand for microfinance loans. PetNet, meanwhile, is a money transfer agent of Western Union, has 200 locations nationwide.

Rolando Victoria, ASKI’s executive director, said its loan portfolio increased by 20 percent year-on-year to P240 million as of May. It also has a capital base of P63 million.

ASKI provides P5,000 to P150,000 worth of micro loans with 3 percent monthly interest rate to its clients.

“There is strong demand for microloans such as in agricultural loans and for small businesses,” he said. It also provides microinsurance with only P20 paid every week in exchange for P120,000 insurance coverage.

ASKI also plans to use make use of ATM services in releasing loans to their clients.

Besides ASKI, PetNet also signed a MOA with GSIS Family Bank in April.

The Bangko Sentral ng Pilipinas (BSP) has been encouraging banks to engage in microfinance, a flagship program for poverty alleviation.

Microfinance loans posted double-digit growth last year as more banks increased their participation in microfinance lending,

Amando M. Tetangco Jr., governor of the BSP, earlier said microfinance loans grew 12 percent to P6 billion last year.

About 229 banks are into microfinancing, with a total client base of 780,000.



Source : ManilaTimes
 

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