AQUINO, IRENE P.

BA ENT-3A

QUIZ 2

a. What are the benefits of micro-financing in the Philippines?

Microfinance has numerous benefits. First off, microfinance helps in poverty alleviation. Because
the Philippines is a third-world country, many Filipinos are impoverished. Microfinance is the provision
of small loans to increase income levels and thus improve living standards. Microfinance provides the
poor with resources and access to start their businesses. Aside from that, microfinance creates
employment opportunities. Entrepreneurs can use microfinance to expand their businesses that require
more manpower. By means, entrepreneurs need employees and that is how microfinance provides job
opportunities. Above all, microfinance in the Philippines helps Filipinos improve their standard of living.

b. What strategies has the National Credit Council of the Philippines implemented to improve
access to financial services?

Provision of a policy environment which is conducive to the effective and efficient functioning of the
financial market. This will be carried out by doing the following:

o Implementing a market-oriented interest rate policy in microfinancial intermediation

(both on the savings and lending side).
o Pursuing financial policy reforms with the end in view of removing existing distortions in
the financial market, e.g. loan quotas, earmarking of public funds for direct lending, etc.
o Rationalizing all existing government credit and guarantee programs toward the
objectives of implementing microfinance programs in a market-oriented setting and
encouraging greater private sector participation in the delivery of microfinance services.

Establishment of a market-oriented financial and credit policy environment which is conducive

for the broadening and deepening of microfinancial services. Broadening and deepening mean the
development of new product lines and services, the design and implementation of new microfinance
technologies and practices which will result to increased microfinance intermediation between the
target clientele and MFIs. This will be accomplished through the following:

o provision of appropriate supervisory and regulatory framework for MFIs which will
enable them to engage in the development of new and innovative product lines and
services appropriate to the demand for financial services/products by poor households
and microenterprises;
o establishment of standards of performance and business practices to guide the
operations of MFIs;
o promotion of broad-based savings mobilization, linkage banking technology and other
microfinance technologies;
o provision of information and training on best practices in microfinance to MFIs.
 Implementation of a capacity-building program for MFIs. The program will be implemented
through the following:

o provision of technical assistance to MFIs;

The following areas of capacity building will be given emphasis in the provision of
technical assistance: (1) local deposit mobilization, (2) financial and project
management, (3) use of information technology, (4) development and establishment of
microfinance technology, innovative product/service lines.

o documentation, packaging and dissemination to MFIs of practitioner-based training and

technical services. This will be done through the PCFC.
o encouraging research and academic institutions to conduct studies, convene policy level
discussions that will promote awareness of microfinance as a sound commercial
investment. These institutions will identify best practices in microfinance, develop and
install training and microfinance technology packages.

f. What measures should be taken to ensure consumer protection in the microfinance sector?

Customers must be handled fairly and openly by microfinance institutions. Following are the
procedures that should be followed to protect the clients. The protection of client information comes
first. Consumers of financial services have a right to expect that their financial transactions and any
pertinent personal information given during a transaction will be kept private and safe. To do this, BSFIs
must make sure that their processing of the personal information of their financial customers is done
under clearly stated information security policies, well-defined protocols, a secure database, and
routinely re-validated procedures.

This principle ensures that financial consumers are treated fairly, honestly, and professionally
throughout their interactions with the BSFI. BSFIs must adopt mechanisms to protect their customers'
interests, such as rules governing ethical staff behavior, acceptable selling practices, fair and equitable
terms and conditions, and the provision of products and services appropriate to the consumers' capacity
and risk appetite, among other things, and incorporate them into their policies and procedures, control
functions, and agreements with outsourced third parties.

c. What are the challenges of providing micro-financing in the Philippines?

The Philippines' microfinance industry has many difficulties. Location is the first. It is difficult to
deliver microfinance in remote places due to the locations, especially when the primary target of
microfinance is the rural poor. Low-income individuals are difficult to approach because of their
distance. Moreover, the marginalize incapacity to repay their loan. They haven't been taught how to use
their loans by the institutions, which is why they haven't made loan payments. The hefty interest rate
comes last. High interest rates make it difficult for customers to repay their debts because the interest
charges increase each time they miss a payment deadline.