POWERING

INNOVATIONS
IN MICROFINANCE
conference on microfinance
July 24 - 25, 2008 * Asian Development Bank, Manila, Philippines
 Edited by Foxit PDF Editor
Copyright (c) by Foxit Software Company, 2004 - 2007
For Evaluation Only.

CONCURRENT WORKSHOP SESSIONS

Friday, July 25, 2008

11:00 a.m. - 12:30 p.m.

Emerging Partnerships between Commercial Banks and MFIs Auditorium Annex 1 & 2

In previous years, wholesale loan funds for retail microfinance institutions in the Philippines were largely provided by
government financial institutions such as People’s Credit and Finance Corporation, Land Bank, Small Business Corporation
and the Development Bank of the Philippines. Lately, a few commercial banks have designed and opened a window for
MFIs to access wholesale loan funds. While these banks are ready and able to do a respectable volume of business with
MFIs, the loan applications and actual volume of loan releases remain way below the expectations of the banks. The session
will deal on the early experiences of two commercial banks that have loan windows for retail MFIs. Representatives of the
two banks will discuss the challenges they have experienced at the field level, including insights, learnings and peculiarities
of doing business with MFIs.
Resource speakers: Facilitator:
Josaias T. Dela Cruz Edgardo Garcia
Vice President for Microfinance, BPI Microfinance Council of the Philippines, Inc.
Remigio Tito C. Tirones, SVP & Group Head, Documenter:
SME Banking Group, Planters Development Bank Laila Deles, Pinoy ME
1
 • Over 34M (40%) of our
population live below the
poverty line
Why Microfinance?
Why Microfinance?

943 2
3
4
 Over the last 25 years,
microfinance in the Philippines
has doubled every 5 years
into a P7B industry.

5
 Philippine MFIs and Outreach

 5 Government Financial Institutions

 50 Non-Governmental Organizations (NGOs) -

current outreach approximately 500,000

 30 Cooperative Banks - estimated outreach of

400,000

 144 Banks (Rural, Thrift) - 540,000 outreach

 A growing number of commercial banks

6
 What is the Scope of
Microfinance today?
• Microenterprise Loans

Why Microfinance?
• Savings Products
• Micro Insurance
• Remittance / Funds Transfers
• Micro Agri Loans
• Housing Microfinance
• Alternative Energy Loans

943 7
  Current supply in the Philippines is only
reaching between 10% to 20% of market

 Potential market of 5.6M families, or 28M

people and a P17 billion funding gap

(Lamberte, et.al. Asian Development Bank PPTA study, 2002) 8

 Funding for MFI capacity building /
expansion

 Need for reliable automated Management

Information Systems and operations

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Q: What is BPI
Microfinance?

10
• BPI was the first private
commercial bank to lend to
MFIs in the 1980s
• BPI is the first private KB to
mainstream MF into its core
business
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  Wholesale Institutional Loans

- Very competitive interest rates

- From P5M per MFI
- 1 to 3-year tenors
- On clean or secured basis

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 Developmental Capacity-building Soft Loans

- Via BPI Foundation

- For training and MIS enhancement
- 4% p.a., 1 to 2-year tenors
- Up to P1MM per MFI

13
 Capacity Building

Partnership with Ateneo de Manila University

Development Studies Program,
Institute of Social Sciences

- MF Capacity-Building Courses – 10 locations

nationwide
- Customized Technical & Mentoring Assistance –
financial control and operations management

14
 Capacity Building Loan
RB Eligibility Requirements

- BSP CAMELS rating of at least 3

- PESO rating of at least 3
- Positive earnings for last 3 years

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 Business Advisory & Operations Solutions

BPI Express Cash (E-Cash) / Expresslink (E-Link)

- Simplifies Loan Disbursement / Cash Management

- Eliminates Check Preparation & Disbursement

16
 Institutional Partnerships

- With international / local developmental

institutions (e.g. Microfinance Council, ADB)
- Transactions with Grameen Fund USA and
Cordaid (Netherlands)

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 BPI Microfinance Unit
9th Floor, BPI Head Office

- Tel Nos: 845-5851 / 816-9547

- Fax: 845-5935
- Email: bpifoundation@bpi.com.ph
bpimicrofinance@bpi.com.ph

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 Planters Development Bank

Microfinance
Emerging Partnerships

SVP REMIGIO TITO C. TIRONES

S.M.E. Banking Group Head and Microfinance Department Head

Conference on Microfinance: “Powering Innovations in Microfinance”

July 25, 2008, ADB, Manila, Philippines
 Planters Development Bank

Corporate Background:

•Started more than 40 years ago with an asset base of

P500,000
•Largest private development bank with total assets of
over P40.4 Billion

•21st Largest Banking Institution in the country today

with total capital base of P3.1 Billion

•Belongs to the top 250 in the country’s top 1,000

corporations
 Planters Development Bank

Corporate Background:
•Nationally acclaimed as the Bank for Small and
Medium Enterprises (SMEs)
•Consistent recipient of various awards and citations from
the country’s program agencies on SMEs
•One of three banks worldwide to pursue Double
Bottom Line Banking (Harvard Study)
•72 Nationwide Branches (9 were opened in 2006)
 Planters Development Bank

Institutional Foreign Shareholders:

Asian Development Bank (1983)

Netherlands Development Finance Co. (1986)

IFC of the WorldBank (2000)

German Investment and Development Agency (2006)

Planters Development Bank

Ambassador Jesus P. Tambunting

Chairman & Chief Executive Officer
• 2005 Asian Banking Awardee for
Outstanding Lifetime Achievement
• 2003 Management Man of the Year
• Chairman, Association of Development
Financing Institutions in Asia and the
Pacific (ADFIAP)
• Co-chairman, Philippine British Council
• Director, Globe Telecom
• 1993-1998 Philippine Ambassador to London
Planters Development Bank

Ma. Flordelis F. Aguenza

President & Chief Operating Officer

z Board Member, ShoreBank Corporation in

the United States
z Board Member, Chamber of Thrift Banks
z Director, PDB FMO Development Center
z Director, PDB Properties, Inc.
z Director, PDB SME Solutions, Inc.
Planters Development Bank

Microfinance
Experience
 Planters Development Bank

• September 2006 - Merger of Plantersbank and

Micro Enterprise Bank

• Establishment of the Microfinance Department

under the SME Banking Group

• Created a strong unit with solid microfinance

experience and reputation

• Started offering the wholesale microfinance loan to

top MFI’s through the nationwide PDB branch
network
 Planters Development Bank

Objectives:
ƒ To better serve as a conduit of funds via wholesale
credit to the MFIs

ƒ To serve as a complementing institution rather than a

direct competitor of existing MFIs

ƒ To provide scale-up opportunities for existing MF

clients with higher financial requirements

ƒ To push microfinance much faster given greater

resources, geographical coverage, and a stronger
organization with solid experience and reputation
 Planters Development Bank

Target Clients:
The Wholesale Microfinance Facility is marketed among:
¾ Microfinance Institutions (MFI’s)
¾ Rural Banks
¾ Cooperative Banks

which are accredited or recognized by:

¾ Bangko Sentral ng Pilipinas (BSP),
¾ Microfinance Council of the Phils. (MCPI)
¾ Microenterprise Access to Banking Services (MABS)
¾ Alliance of Philippine Partners in Enterprise Development, Inc.
(APPEND)
¾ Other Local and International Microfinance Industry
Associations/Networks
 Planters Development Bank

Product Features:

• Revolving Credit Line

• Term: 1 year / 360 days
• Interest rate: Market Rate
• Payment Mode: Monthly or Quarterly, Principal
and Interest amortized
• Service Charge: 1% of the amount drawn
• Security: Assignment of Sub-borrowers PNs
 Planters Development Bank

Product Features:
• Manner of Release: in tranches; via drawdown based on submitted
Certified List of Sub-borrower's PNs

• Loan Proceeds will be used to re-finance microfinance sub-borrowers

• Drawdown will be on a per branch summary of listing of PNs for easy

monitoring of accounts

• MFI must open an account with PDB

• Assigned amount of PNs should be 120% of the release of fund at any

point in time
 Planters Development Bank

Challenges:
1. Compliance with Accreditation and Pre-approval
Requirements

‰ Timing and accuracy of information

‰ Correct and complete information

‰ Point person for MFI (e. g. President, Exec. Dir., Compliance Officer,
Microfinance Head, etc.)

‰ Due diligence (e. g. field visit, desk review, interview with MFI and clients, etc.)

‰ Mode of communication (email, telephone, mobile phone, etc.)

 Planters Development Bank

Challenges:
2. Utilization of Approved Credit Line

‰ Interest rate

‰ Cash flow of MFI

‰ Documentary requirements
 Planters Development Bank

Challenges:
3. Drawdown

‰ Turnaround time in loan processing

‰ Documentary requirements

‰ Issuance of PDCs
 Planters Development Bank

Challenges:
4. Renewal of Microfinance Wholesale Facility

‰ Turn-around time in loan processing

‰ Documentary requirements

‰ Interest rate

‰ Repayment
 Planters Development Bank

WHY PLANTERSBANK?
• Proven track record

• SME-friendly procedures and processes

• Premium service

• Branch network
 Planters Development Bank

HOW COULD PLANTERSBANK SERVE THE

MICROFINANCE INDUSTRY BETTER?
• Type of loan

• Loan Term

• Efficiency (TAT, quality of deliverables, etc.)

• Collateral requirements

• Value-added services (sme.com.ph, allied services, etc.)

 Planters Development Bank

Acceptable Eligibility Criteria for MFI’s:

¾ BSP Camels Rating of 3 (applicable for banks)

¾ PESO Microfinance Standards Rating of not less

than 70 points or Adjectival Rating of 3 - Satisfactory

Potentials:
¾ Product development to address the needs of MFI’s
 Planters Development Bank

AMBASSADOR JESUS P. TAMBUNTING

Chairman and CEO, Planters Bank

“ An entrepreneur is someone with a dream,

determination, courage,
and, may I add, Plantersbank.
From the very start, in 1961, our bank
has been supportive of the man, or the woman,
with the determination, and the courage to pursue a
dream.
Our support of the Filipino entrepreneur goes
beyond commitment.
It is a passion.”
Planters Development Bank
Edited by Foxit PDF Editor
Copyright (c) by Foxit Software Company, 2004 - 2007
For Evaluation Only.