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Thursday, January 15, 2009

Access to Finances thru Microfinance Program

The Approach

Most third world country like the Philippines, Microfinance institutions have become the common trend in bank and financing institution today. These are the rural banks or Small Medium Enterprises (SME’s) which adopts the principle of Nobel Peace winner (2006) Mohammed Yunos (along with Grameen bank).

The idea of putting the banking and finance within the reach of simple individuals refers as “village banking”. The philosophy on microcredit program is that the banking institution is not exclusive for the elite .It tries to revolutionize the conventional banking which is only for the few. Small entrepreneurs have also the right to access finances for its growth. By hindering these entrepreneurs to access finances for their utilization, development is also hindered.

The third world country is famed for small medium enterprises and entrepreneurs. That is why microfinance institutions exist. It is perceived that microfinance program may be able to supply the needs of these entrepreneurs .These entrepreneurs are also expected to contribute to national growth.

Beneficiary /Target Clients

Microfinance , the rural banks provide loans to poor enterprising individuals (entrepreneurs) with minimal interest. Target beneficiaries of the program are those who are willing to pay and have the capacity to pay. Most microfinance institutions select those who are engaged in entrepreneurial or farming activities especially women entrepreneurs. Group lending is applied in this program .The group of entrepreneurs is called “Center”. The borrowers are expected to pay in full amount according to the center’s liability to the bank. It means that these of entrepreneurs should have a complete payment for the center.

Policy and the Implementers

Team unity is observed in microfinance program, when one group member cannot pay for his/her loan amount the whole group will contribute to patch up for his debt. Most Microcredit implementers have applied strict credit discipline on its program like Enterprise Bank Inc( EBI) , Kabalikat para sa Maunlad na Buhay Inc.(KMBI) and Rural Bank of Monte Vista People’s Bank of CARAGA.

Every bank has loan scheme program (policies) to follow .In this way, clients has freedom to choose the bank they want to transact with. There are programs that follow individual payment type policy like the Center for Agricultural and Rural Development Inc. (CARD).The payment also is not done in the bank. The bank has collectors who facilitate center meetings .The bank collectors refers to as the Accounts, Technical and Project officer or project officers.

Results

Several microfinance institutions here in the Philippines have emerged to fill up the gaps in financial and capital aspect .Microcredit program is primarily driven by this needs of ordinarily citizen to have access to funds. This undertaking has been of great impact for the growth of entrepreneurs, farmers and many ordinary citizens.

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