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Rural banks to relaunch SME finance, microfinance programs


MANILA, Philippines - Foreign-funded programs to train rural bankers on microfinance and SME financing will be relaunched soon, after the association of rural banks settled its internal squabbles. Tomas S. Gomez IV, newly-elected president of the Rural Bankers Association of the Philippines (RBAP), said the association will forge new agreements with partner-institutions such as the United States Agency for International Development (USAID) and Germany-based Gesellschaft Technische Zusammenarbeit (GTZ), as well as strengthen its partnerships with the Development Bank of the Philippines and the Land Bank of the Philippines. All these come after a year of inactivity due to internal quarrels that at one point resulted in the election of two sets of directors. The squabbling groups have since reunited, electing one set of directors in May, which should allow RBAP to continue with a number of initiatives, Mr. Gomez said. RBAP will ink an agreement with the USAID within the month for the extension of the fourth phase of the latter’s Microenterprise Access to Banking Services (MABS) program. The fourth installment of the program, which will run until 2013, will teach rural bankers how to design their microinsurance, microhousing loan and mobile phone banking products and services, as well as strengthen their microloans and microsavings businesses. MABS was launched in 1998 to provide financial services to the microenterprise sector in Mindanao. It was eventually extended to rural banks, enabling them to serve more than 470,000 small and medium enterprises (SMEs) by providing them with P17 billion worth of loans. Mr. Gomez also said the organization will reconnect with the GTZ, which had previously supported training on SME financing among thrift and rural banks. He added that the Landbank, which has been the rural banks’ source of wholesale loans, is currently discussing with RBAP how to accelerate the disbursement of loans to the agricultural sector. The rural banking sector has continued to show impressive growth, with a total loan portfolio growing by 21.5% to P96.53 billion in end-2007, P4.2 billion of which was channeled to some 600,000 microborrowers. The sector remained profitable as return on equity (ROE) was at 14.6% in end-2007, higher than commercial banks’ 11.8% and thrift banks’ 5.8%. Mr. Gomez said the sector is expecting double-digit growth in loans this year, although not as high as what it achieved last year given the challenging economic conditions. - BusinessWorld
Tags: ruralbanking
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