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HSBC opens R500-million facility for relending to microfinance sector |
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By FIL C. SIONIL
The Manila Bulletin 09/20/2005 HSBC is offering a P500-million annual facility for relending to microfinance sector, including cooperatives, non-government organizations (NGOs), rural and thrift banks, a step towards going into retail business. HSBC Philippines Executive Officer Warner Manning said the facility is in response to the call of the Bangko Sentral ng Pilipinas (BSP) for lenders to open-up a window for micro-financing. HSBC’s foray in microfinance in the Philippines is new. The world’s local bank has been into microfinance lending market in three under-developed countries including India and Brazil. Manning said he is open to talks with People’s Credit and Finance Corp. (PCFC) for a possible lending cooperation. "I would be more than willing to talk with PCFC," he told reporters. To recall, PCFC President and Chief Executive Officer Edgar V. Generoso is looking for funding sources either from GFIs, multilateral agencies, and other private institutions. "We would be needing another R3 to R4 billion in the next few years," Generoso said. HSBC’s offer of R500-million facility comes in handy. PCFC is the lead government agency mandated to mobilize resources for microfinance services. Under its charter, it should receive R500-million funding annually from the Philippine Amusement and Gaming Corp. (Pagcor). But, Pagcor virtual gave up this mandate to the Department of Budget and Management (DBM), which has no appropriations for pro-poor government financial institution (GFI) due to budgetary constraints. According to Manning, HSBC will be just a participating financial institution for microfinance firms because of its handicap in retail business arising from its limited branches. At present, credit card is the only retail operation HSBC has. The bank offers a credit card loan at an interest rate of between nine percent and 10 percent. Thus, the plan is to lend to other financial institutions, which will then directly be lending to microentrepreneurs. That is the same position taken by most commercial banks which are willing but do not have the necessary infrastructure or expertise. Other commerical banks that have expressed willingness to directly or indirectly get involved in microfinance are the Bank of the Philippine Islands (BPI), Allied Banking Corp., and Planters Development Bank. In contrast, a large number of rural banks have devoted a significant portion of their loan portfolio to microlending while others have converted some of their branches for microfinance. In a survey done by the United Nations Development Programme (UNDP) in 2001, the microfinance sector needed at least P4.2 billion to expand their operations to service one million clients by 2005. It was however described as "a fraction of the more than five million new families waiting to avail of opportunities by that time." |
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