Price Transparency and Microfinance Related Regulations
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The document outlines updates on price transparency and microfinance regulations presented by Gerardo Butardo from Bangko Sentral ng Pilipinas at a national roundtable conference in June 2012. Key points include the requirement for transparent loan terms, revised microfinance reporting, and the establishment of micro-banking offices to expand services. It also discusses regulatory changes regarding relationships between banks and NGOs, customer risk classification, and the introduction of electronic money systems.
Price Transparency and Microfinance Related Regulations
- 1. Session 1: Price Transparency and Microfinance Related Regula9ons Gerardo Butardo Bangko Sentral ng Pilipinas 2012 RBAP-MABS National Roundtable Conference June 7-8, 2012 Hyatt Hotel & Manila
- 2. BANGKO SENTRAL NG PILIPINAS LATEST REGULATORY UPDATES MABS ROUNDTABLE Hyatt Hotel 07 June 2012
- 3. o Loan transaction transparency o Revised MF reports o Microfinance Products o Extension of MSEs exemption
- 4. o Bank – NGO relationship o Reduced barriers to customers acquisition o Expanded Physical Network o Expanded Virtual Reach
- 5. o Coverage: o All banks; o NBFIs under BSP supervision; and o Entities with credit-granting facilities not covered by issuances of BSP, SEC, IC and CDA
- 6. o Requires charging of interest on the outstanding balance of a loan o Defines effective interest rate and requires that this will be the only rate used in all loan documents and marketing materials o Requires a uniform disclosure of the loan terms o Requires posting in conspicuous places the revised format of disclosure statement
- 7. o Report on Microfinance Products (monthly) and Income Statement on Retail Microfinance Operations (quarterly) o Contain data on MF loans both retail and wholesale, and micro-deposits
- 8. o Retail MF loan – refers to a loan directly granted to end-users, e.g. m i c r o - e n t r e p r e n e u r s , microenterprises, etc. o Wholesale MF loan – refers to a loan granted to an FI for on-lending to qualified end-users
- 9. o “Other Loans – Microenterprises” – loans granted to microenterprises but not classified as “microfinance loans” o “ M i c r o - l o a n s ” – r e f e r t o t h e combined balances of “microfinance loans” and “other loans – microenterprises”
- 10. o Microenterprise Loan Plus or Microfinance Plus – range from P150,001 to P300,000; borrowers w/ track record of at least 2 loan cycles in the range of P50K to P150K
- 11. o Micro-Agri loans o Amended existing regulations to include minimum prudential requirements to approve application: o CAMELS at least “3” & MGT score of at least “3”; o CAR of at least 12%; o No major supervisory concerns o No arrearages on MF borrowings
- 12. o Micro-Agri loans o Non-compliant bank is given one examination-cycle to correct; provided the bank submits a viable plan
- 13. o Extended exemption of loans granted to micro & small enterprises from certain documentary requirements, e.g. ITR, audited FS, etc., up to 31 December 2014
- 14. o NGO/foundation engaged in retail MF operation and incorporated by any stockholders, directors, officers of a related bank as “related interest”
- 15. o Transactions between banks and related NGOs/foundations shall be covered with notarized contracts/agreements classified as category A-3 reports
- 16. o Bank officers are not allowed to be involved in the daily MF operations of related NGO/foundation o Issuance of general principles and standards governing business relationships between banks & their related NGO/foundations
- 17. o Introduction of a risk-based and tiered system of classifying customers, i.e. low, average & high risk) o A framework for applying reduced, average and enhanced due diligence, customer acceptance, retention & identification process
- 18. o Possibility of outsourcing or relying on a third party on the face to face requirement for KYC, gathering of information and documents
- 19. o Establishment of Micro-banking Offices (MBOs) o Expands the products and services that can be offered o Micro-loans o Micro-deposits o Check deposits of existing microfinance clients o Microinsurance o E-money Conversion o Collection/ Pay out of benefits from government o Utility payments o Purchase of foreign currency
- 20. o Electronic Money Circular o Defines electronic money o Allows the establishment of e-money issuers (whether bank or non-bank) o Provides the platform for an efficient retail payments platform o Fosters the establishment of a ubiquitous agent network
- 21. Wider Range of Products • Micro-‐deposits Expanded Physical • Microinsurance Network • Micro-‐agri Loans • Opening of Micro-‐banking • Housing Microfinance Offices (MBOs) • Microfinance Plus Expanded Virtual Reach Lower Barriers to • E-‐money Issuers Customer Acquisi9on • E-‐money Network Service • Updated AnI-‐Money Laundering Providers Rules Consumer Protec9on and Financial Literacy