QuestionsQuestions (BSP CIRCULAR NO. 782)
BSP Circular No. 782 (Jan. 21, 2013) amends Appendix 45 (Notes on Microfinance) of Section X361 of the Manual of Regulations for Banks, specifically updating the “Characteristics of a typical microfinance client.”
The amendments were approved by the Monetary Board through Resolution No. 69 dated 10 January 2013.
Item C on the “Characteristics of a typical microfinance client” was amended.
It added “poor and low income clients with annual family income below the national average” based on the latest available NSO (now PSA) Family Income and Expenditure Survey (FIES).
Poor and low income clients refer to those with annual family income below the national average based on the latest available NSO Family Income and Expenditure Survey (FIES).
The 2009 national average annual family income is PhP 206,000.
The circular expressly states that the income-based “poor and low income” definition is for purposes of microinsurance products only.
Examples include: low income with regular cash flow; employment in the informal sector/low wage bracket; lack of physical collateral; and closely interlinked household and business activities.
It highlights that typical microfinance clients may not have assets to secure conventional loans, which is relevant to how microfinance products (and related risk/eligibility frameworks) are designed.
The FIES is used as the statistical basis to determine the national average annual family income and to classify “poor and low income” clients (for microinsurance purposes).
The client’s annual family income is compared against the national average annual family income derived from the latest available NSO FIES.
It takes effect fifteen (15) calendar days following its publication either in the Official Gazette or in a newspaper of general circulation.
It updates regulatory guidance binding on covered banks and entities under the Manual, affecting how microfinance clients—especially for microinsurance—are classified for compliance purposes.
Banks must align their determination of “poor and low income” clients (for microinsurance purposes) with the circular’s definition based on the latest NSO FIES and the national average benchmark.
Based on the circular, “poor and low income” refers to those below the national average. Those above the threshold would not meet the definition for microinsurance purposes under this circular.
It references Appendix 45 (Notes on Microfinance) of Section X361.