Philippines: Only Accredited NGOs Can Now Engage in Microfinance

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Nov 2015
Philippines, November, 08 2015 - Only qualified non-government organizations can now engage in microfinance operations for the availment of government incentives. Last November 3, President Aquino signed the measure regulating NGOs engaging in microfinance operations into law, the Republic Act No. 10693 or “Microfinance NGOs Act”.

Only qualified non-government organizations can now engage in microfinance operations for the availment of government incentives.

Last November 3, President Aquino signed the measure regulating NGOs engaging in microfinance operations into law, the Republic Act No. 10693 or “Microfinance NGOs Act”.

“The State recognizes the indispensible role of non-government organizations (NGOs) in fostering local enterprise development and social entrepreneurship, including the provision of microfinance services to microenterprises,” according to the law.

The new law seeks to establish a “Microfinance NGO Regulatory Council” to handle the accreditation of concerned groups and monitor their financial and social performance. The council is also empowered to place under probation, suspend or revoke any certificate of accreditation of microfinance NGOs.

It also requires the accreditation of microfinance NGOs as a condition for the availment government incentives.

The Microfinance NGOs Act also provides duly-accredited microfinance NGOs needed support and incentives such as access to government programs and projects, technical assistance and preferential tax treatment in a bid to strengthen their capacity.

“In pursuance of this policy, the State shall support and work in partnership with qualified NGOs in promoting financially inclusive and pro-poor financial and credit policies and mechanisms, such as microfinance and its allied services,” it added.

Microfinance NGOs are nonstock, nonprofit organizations registered with the Securities and Exchange Commission that provide affordable credit and other microfinance service for the poor and low-income households.

“Upon the effectivity of this Act, Microfinance NGOs which are certified by the SEC to have no derogatory information shall be deemed accredited for one (1) year, unless earlier revoked by the Council for good cause after review,” the law read.

Microfinance NGOs must also develop and implement systems, practices, and controls for efficient and sustainable financial operations through prudent resource management, asset-liability management, liquidity management, and financial information management.

Duly accredited Microfinance NGOs operating in areas in poverty, calamity or armed conflict can likewise gain access to government support programs such as operational and capacity building grants, low interest loans and guarantee funds.

They are also entitled to access any form of technical assistance from the government, donors and other support organizations in facilitating the linkage between the poor households or micro enterprises to financial services, training, among others.

On the taxation of microfinance NGOs, an organization shall pay a two percent tax based on its gross receipts from microfinance operations in lieu of all national taxes. The non-microfinance activities of Microfinance NGOs shall be subject to all applicable regular taxes.



Source : Manila Bulletin
 

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