Rationale for Abolition of NLDC
- Duplication and overlap of functions among NLDC, PCFC, and SBC in microfinance provision.
- Existence of six GFIs providing financial services to the microfinance sector causes redundancy.
- GCG recommended abolition for streamlining government financial services.
Abolition and Asset Transfer
- Formal abolition of NLDC mandated.
- Transfer of all NLDC assets and liabilities to LBP.
- NLDC's net worth classified as capital infusion to LBP, which will issue shares to the National Government accordingly.
Transfer of Functions and Client Portfolios
- NLDC’s microfinance functions and existing portfolios to be absorbed by LBP and SBC.
- LBP to establish a special window dedicated to microfinance services.
- MFIs eligible for bank credit referred to LBP.
- MFIs targeting hard-to-reach markets with higher risk referred to SBC.
Refocusing Roles of SBC
- SBC to concentrate on small MFIs serving hard-to-reach or high-risk areas not eligible for bank credit.
- Encouragement for creditworthy MFIs under SBC to seek funding from LBP or private banks to focus SBC resources on its core mandate.
Compensation for NLDC Personnel
- Affected NLDC officials and personnel may avail of benefits under RA No. 6656 (1988).
- Separation pay and related benefits to be funded from NLDC corporate funds.
- Department of Budget and Management (DBM) tasked with ensuring availability of funds for compensation.
Technical Working Group for Implementation
- Composed of representatives from:
- LBP to absorb assets, liabilities, and functions related to wholesale lending.
- SBC to take on servicing small high-risk MFIs.
- Department of Finance to coordinate asset/liability transfer.
- DBM to ensure funds for personnel incentives if NLDC funds insufficient.
Legal Safeguards
- Separability clause: invalidity of any provision does not affect the rest of the Order.
- Repeal clause: inconsistent provisions or prior issuances are repealed or modified accordingly.
Effectivity
- Immediate effectivity upon issuance.