LAST year was truly a banner year for the Bangko Sentral ng Pilipinas (BSP) Microfinance and Financial Inclusion programs.

For its intensive effort to build an inclusive financial system, which aims to expand access to financial services by effectively mainstreaming the unserved and underserved population in the financial system, the Philippines has been declared as the best in the world in terms of its microfinance regulatory framework.

The 2009 recognition was given by the Economist Intelligence Unit through its First Annual Global Microfinance Index and Study.

The study looked at 55 countries and measured each country’s state of regulatory framework, investment climate and institutional development.

The Philippines got a perfect score (4 out of 4) for the first criterion, or the way it regulates microcredit activities.

Our country emerged with the best microfinance regulatory framework because of its adoption of a national strategy, the promotion of a regulatory framework, the presence of a General Banking Law with specific provisions on microfinance, BSP policies on microfinance in the banking sector, and BSP policies on the process of non-government organizations transforming into microfinance banks.

Overall, the Philippines ranked third in the world following the usual microfinance leaders, Peru and Bolivia.

It should be noted that for the past nine years since the BSP was mandated by the General Banking Law to recognize microfinance as a legitimate banking activity, the central monetary authority has issued eighteen circulars and zealously initiated major activities on microfinance.

In its 2009 Yearend Report, the BSP’s Microfinance Committee headed by Deputy Governor Nestor Espenilla Jr. said the circulars issued in 2009 hope to further create a sustainable policy and regulatory environment for financial inclusion in the country.

The BSP Circulars addressed technological and product innovations while the other initiatives focused on areas of financial learning and consumer protection.

One circular, issued in March 2009, provides the guidelines in the issuance of electronic money (e-money) and the operations of e-money issuers.

With electronic money, clients need not leave their places of business—particularly those located in the rural areas—to transact with their banks. Through a simple text message, they can pay loans, withdraw money, or make deposits.

Another circular, issued only last October, recognizes the fact that most microfinance clients live in remote areas, hindering them from regularly visiting and transacting with their banks. Circular 669 allows clients of microfinance-oriented banks to make limited withdrawals in their bank’s other banking office.

Last November 26, 2009, the Monetary Board approved Circular that would provide opportunities to all banks to offer housing microfinance loans for poor and low-income households.

With all these endeavors, the BSP is sure to achieve its goal of seeing a wider range of financial services available to more Filipinos, especially to the “unbanked.”

Note: You may email us at Past articles may be viewed at