Microfinance Focus, June 21, 2011: The Central Bank of Philippines - Bangko Sentral Ng Philipinas has revised regulations for Banks to address risks on relationships between Banks and their related microfinance NGOs/Foundations. Under the amended regulation, Banks are now prohibited from getting involved in the daily microfinance operations of the related NGOs.

Further, the deposits of clients of these microfinance institutions maintained with related lending banks are classified as non-risk asset. Interest rates on such deposits cannot be more than those of similar type of deposits accounts.

“Total loans, other credit accommodations and guarantees granted to related NGO/Foundation shall not exceed the total deposits owned by its clients”, reads the Central Bank’s circular.

There are currently over 200 banks in Philippines providing microfinance services to over 900,000 clients with PhP 6.5 billion in loans outstanding and PhP 3.0 billion in savings.