By: Eric Miller, guest blogger

The first panel discussion of the RBAP-MABS National Roundtable Conference, moderated by MABS Chief of Party John Owens, addressed the current trends and challenges in the microfinance industry. Topics ranged from market issues, competition, the regulatory environment and branchless banking.

Ms. Pia Roman-Tayag, the Inclusive Finance Advocacy Staff Head of the Bangko Sentral ng Pilipinas (BSP), kicked off the panel discussion with a look into the regulatory environment. She began by emphasizing that policy and regulations are not the answer, but they provide the enabling environment and support for the market-based solutions of microfinance. To address the risks of limited technical know-how, inadequate risk management practices and governance issues of the early microfinance era, the BSP set regulations to require banks to develop adequate methodologies, risk management systems and comprehensive governance standards.

Ms. Roman Tayag noted that the current microfinance era has seen a mainstreaming of the industry with commercial investors, new products, technological innovation and a move towards financial inclusion. The current challenges for the banks include the need to find greater efficiencies, become more transparent and develop effective credit underwriting standards. For microfinance clients, she noted that financial literacy and the awareness of consumer rights and redress mechanisms are most important. To meet these new challenges, the BSP must be responsive, especially in light of the new definition of microfinance as addressed earlier in the Governor’s speech. Additionally, BSP will review consumer protection regulations, take action against financial crime and over-indebtedness, and advocate for financial literacy.

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