CREDIT disbursed to the “entrepreneurial poor” reached P25.1 billion in the second quarter last year, with more banks offering microfinance products, the Bangko Sentral ng Pilipinas (BSP) said.

BSP Governor Benjamin E. Diokno said the total was 863% higher than the P2.6 billion seen in 2002, which was the year the central bank issued microfinance regulations for banks.

Central bank data also showed microfinance clients surged to over two million from April to June last year versus the less than 400,000 seen in 2002. Some 149 banks extended microfinance products and services from 119 in 2002.

Meanwhile, credit disbursed by microfinance institutions reached P41.9 billion in 2018, serving 5.2 million clients.

“By continuing to promote microfinance, we support the industry’s clients in getting much-needed financing to rebuild their livelihoods through and beyond the pandemic,” Mr. Diokno said.

BSP Financial Inclusion Office Director Ellen Joyce L. Sufficiencia said interest rates for microfinance credit is usually at around 6% monthly.

“We don’t usually use the annual interest rates because the loans are very short-term and repayments are more frequent, weekly basis,” she said.

Through its involvement with the Financial Inclusion Steering Committee, the BSP will facilitate engagement with the Philippine Guarantee Corp. to explore the development of a loan guarantee program for microfinance institutions, it said.

The central bank added that it is eyeing to extend technical assistance and grants to help microfinance players tap digital solutions.

Low-income Filipinos who are unbanked usually rely on informal schemes such as “5-6” to secure credit for their small businesses. These schemes employ interest rates of about 20% for monthly or weekly credit.

Only 29% of Filipino adults have bank accounts, leaving some 51.2 million out of the financial system and unable to tap credit.

The central bank hopes to bring the banked population to 70% of Filipinos by 2023, backed by the emergence of digital financial services as well as the national ID system seen to address the lack of documents needed to open accounts with banks. — LWTN