BSP sets criteria for microfinance services

The Bangko Sentral ng Pilipinas has issued an order for thrift, rural and cooperative banks defining clients that are qualified to receive microfinance services. BSP Deputy Governor Nestor Espenilla Jr. explained that there are three categories of clients eligible for microcredit, among them the poor and low-income with annual family income below the national average, which the National Statistics Office 2009 Family Income and Expenditure Survey pegged at P206,000. Espenilla also said microfinance service can also be offered to clients who already have microcredit loans or individuals who have microdeposits and microfinance savings deposit accounts. The thrift, rural, and cooperative banks were earlier advised against the unauthorized conduct of microinsurance and other insurance-related activities. The BSP also warned that regulators will not think twice on imposing penalties and sanctions versus bank officials. Banks keen on offering microinsurance services must have an agreement with a duly authorized insurer that will make sure that the microinsurance products the bank sells have the approval of the Insurance Commission. Authorized microinsurance agents The banks must also be microinsurance agents with authority from the commission, which defines microinsurance as “an activity providing specific insurance, insurance-like and other similar products and services that meet the needs of the low-income sector for risk protection and relief against distress, misfortune and other contingent events." The Insurance Commission also said a microinsurance product “is a financial product or service that meets the risk protection needs of the poor where the amount of premium, contributions, fees or charges, computed on a daily basis, does not exceed five percent of the current daily minimum wage rate for non-agricultural workers in Metro Manila and the maximum sum of premium and guaranteed benefits is not more than 500 times that [of the] daily minimum wage." Early last year, the BSP authorized over 3,500 rural, thrift, and cooperative banks to sell microinsurance products. The BSP took this step to weed out of the market informal and unauthorized insurance schemes. As trusted financial institutions, banks are ideal insurance channels in the countryside and have deeper familiarity with the low-income market, the BSP said. Last October, the regulator also allowed rural and thrift banks to set up micro banking offices to bring microfinance services to remote areas in cities and municipalities where there are no banks. — ELR/VS, GMA News