QuestionsQuestions (BSP CIRCULAR NO. 680, S. OF 2010)
The Circular adopts a holistic approach using microfinance technology and methodology to provide appropriate financing to microentrepreneurs previously underserved by the formal financial system, including credit for small farming activities, with sound, prudent, and sustainable delivery.
BSP will (1) ensure banks have the capacity and technical capability to offer micro-agri loans, and (2) ensure micro-agri loans are supported by adequate risk management systems and procedures, consistent with microfinance best methodologies and technologies.
The bank must have at least two years of implementing sustainable microfinance programs, with acceptable portfolio-at-risk (PAR) levels as evaluated against prevailing BSP standards.
It ensures the product is properly designed and communicated. The micro-agri loan product must be included in the bank’s microfinance manual as one of the types of services/products offered to clients, and loan/account officers must be trained to explain it clearly.
Short-term purposes only, up to 12 months, whether for farm activities, agri-business, agri-related fixed assets, among others.
Farm activities must be at least 2 years in operation.
Eligibility includes multiple income generation activities (farm and off-farm). Existing borrowers must have a good track record based on the bank’s policies.
Up to PhP 150,000.
Loans should be structured to start small and increase incrementally based on the bank’s policies.
The loan value and affordability must be determined using household cash flow analysis—particularly to ensure the borrower can pay periodically during periods when the project is not yet generating income.
Frequent amortization such as weekly, semi-monthly, or monthly.
Yes. Lump sum payment may be considered as an option of up to 40% of the loan amount.
Like microfinance loans, collateral substitutes may be required (i.e., not necessarily traditional collateral).
They must use the same risk management mechanisms required for microfinance loans, including: affordability and repayment capacity assessment via cash flow analysis; adequate monitoring, collection, control, and provisioning consistent with BSP rules; inclusion in the bank’s microfinance manual; and maintaining a sub-control ledger.
They must have other sources of income sufficient for periodic payments while the loan project is not yet generating income, evaluated through household cash flow analysis.
It requires micro-agri loans to have a specific accounting/control ledger (sub-control ledger) for proper monitoring and regulatory compliance.
The approved micro-agri loan product is considered a microfinance loan and is subject to the same regulatory treatment as existing microfinance regulations.
It takes effect fifteen (15) calendar days following its publication in the Official Gazette or a newspaper of general circulation.