Microfinance NGOs Act Implementation Quiz

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Questions and Answers

What is the maximum duration for which a representative can serve on the Council?

2 years

1 year

3 years (correct)

5 years

Which of the following is NOT a minimum qualification for representatives chosen from the private sector?

Educational qualification in finance or economics (correct)

No record of moral turpitude

Citizen and resident of the Philippines for at least two years

Experience as a Trustee or Officer of a Microfinance NGO

What should happen if there is a vacancy for a representative from the private sector?

The position remains vacant until the next election cycle

A new representative must be elected immediately

The vacancy is filled through the same nomination procedure (correct)

The Council will appoint someone from outside the nominees

What is the timeframe for organizations to submit their nominees after the Implementing Rules take effect?

60 days Signup and view all the answers

Which aspect is NOT part of the criteria for the accreditation of Microfinance NGOs?

Political affiliations Signup and view all the answers

What is the role of the Microfinance NGO Regulatory Council?

To serve as an accrediting entity for Microfinance NGOs Signup and view all the answers

Which of the following must be resolved by the Council?

Controversies concerning nominations from the Microfinance NGO sector Signup and view all the answers

What happens to the term of an appointed representative after a vacancy?

It continues for the unexpired term of the predecessor Signup and view all the answers

What is the minimum number of consecutive years a Microfinance NGO must operate before it can be accredited?

Three years Signup and view all the answers

What type of organization must a Microfinance NGO be established as?

Non-stock, non-profit corporation Signup and view all the answers

Which of the following is NOT a function of the Council regarding Microfinance NGOs?

Developing microenterprise strategies Signup and view all the answers

What is the primary purpose of the development opportunities provided by Microfinance NGOs?

To provide leadership and entrepreneurial skills Signup and view all the answers

What financial requirement must a Microfinance NGO meet to be established?

At least P1,000,000 Signup and view all the answers

What type of programs may Microfinance NGOs offer to address social welfare?

Health and education programs Signup and view all the answers

How often must the Council meet according to the regulations?

At least once a month Signup and view all the answers

What support does the Secretariat provide to the Council?

Technical and administrative support Signup and view all the answers

Under what condition can a Microfinance NGO sustainably operate?

By recovering all of its operational costs Signup and view all the answers

What is the maximum percentage that can be deducted from a loan for compulsory savings?

5% Signup and view all the answers

What type of fees can be collected from a Microfinance NGO by the accrediting entity?

Accreditation, supervision, and monitoring fees Signup and view all the answers

Which option represents a benefit that Council members are entitled to?

Meal allowances Signup and view all the answers

What does the term 'net loans' refer to in the context of Microfinance operations?

Total loans minus total equity build-up Signup and view all the answers

What is NOT a requirement for the activities of Microfinance NGOs?

Offering high-interest rates Signup and view all the answers

Who can Microfinance NGOs collect compulsory savings or microsavings from?

Only from their clients Signup and view all the answers

What is the purpose of the compensating balance in Microfinance operations?

To enhance the loan portfolio's liquidity Signup and view all the answers

What is the maximum contribution limit for microinsurance based on the daily minimum wage rate for non-agricultural workers in Metro Manila?

7.5% of the daily minimum wage rate Signup and view all the answers

What does microinsurance guarantee as the maximum sum of benefits?

1,000 times the current daily minimum wage rate Signup and view all the answers

Which of the following accurately describes microsavings?

A program to collect small amounts of money for various purposes Signup and view all the answers

What defines an NGO in this context?

A nonprofit organization aiming for social advocacy Signup and view all the answers

According to the definitions provided, what does the term 'poor' refer to?

Individuals and families whose income falls below the poverty threshold Signup and view all the answers

What does social performance refer to in the context of microfinance NGOs?

The effective implementation of a microfinance NGO's mission Signup and view all the answers

What is the main purpose of social welfare promotion as defined in the content?

To improve the living conditions of the disadvantaged Signup and view all the answers

Which entity is referred to as the SEC or Commission?

Securities and Exchange Commission Signup and view all the answers

What will happen if a Microfinance NGO's compensating balance exceeds its total loan portfolio?

It shall be deemed to be involved in deposit-taking. Signup and view all the answers

Which of the following is NOT a requirement before a Microfinance NGO consummates a loan transaction?

A loan underwriting fee Signup and view all the answers

What is one role that a Microfinance NGO is prohibited from engaging in directly?

Engaging in the insurance business Signup and view all the answers

Which parameter is NOT included in the tracking requirements of a Microfinance NGO's management information system?

Client satisfaction rating Signup and view all the answers

What must be included in the disclosure statement provided to each debtor-client?

An amortization schedule Signup and view all the answers

Which of these factors does NOT indicate the poverty level of incoming clients?

Personal savings information Signup and view all the answers

What is one of the social protection objectives a Microfinance NGO may pursue through partnerships?

Offering microinsurance products Signup and view all the answers

Which type of fee must a Microfinance NGO disclose to clients as part of the loan transaction?

Collection fee Signup and view all the answers

What is the time frame for a Microfinance NGO to publish its Audited Financial Statements after the end of its financial year?

120 days Signup and view all the answers

Which organization must prescribe the new standard chart of accounts for Microfinance NGOs?

The Council Signup and view all the answers

What must a Microfinance NGO do if it engages in other businesses?

Maintain separate books of accounts Signup and view all the answers

Which of the following support may be provided to Microfinance NGOs operating in poverty-affected areas?

Operational and capacity building grants Signup and view all the answers

What is one method for Microfinance NGOs to fulfill the requirement to publish their financial statements?

Publish on their website Signup and view all the answers

What must Microfinance NGOs provide in addition to their Certificate of Accreditation to access government programs?

Compliance with other government agency's accreditation requirements Signup and view all the answers

Which type of assistance can duly accredited Microfinance NGOs access?

Technical assistance Signup and view all the answers

What is one form of support that government agencies may provide to Microfinance NGOs?

Low interest loans Signup and view all the answers

Study Notes

Implementing Rules and Regulations of the Microfinance NGOs Act (Republic Act No. 10693)

These rules are to implement Republic Act No. 10693, also known as the Microfinance NGOs Act.
The act was promulgated under Section 22.

Rule 2: Definitions of Terms

Act: Refers to the Microfinance NGOs Act (RA 10693).
Accreditation: The official process of recognizing a registered Microfinance NGO, fulfilling minimum standards set by the NGO Regulatory Council; an accreditation certificate is issued by the council upon meeting standards.
BSP: Bangko Sentral ng Pilipinas
BIR: Bureau of Internal Revenue
Charges on loans: Agreed-upon reasonable interest rates, fees, penalties, and other incidental charges to microfinance lending activity.
Clients: Borrowers and savers of a Microfinance NGO.
Compensating Balance: The proportion of a microfinance client's loan retained as capital buildup or microsavings to offset client defaults.
DOF: Department of Finance.
DSWD: Department of Social Welfare and Development.
DTI: Department of Trade and Industry.
Group Loan: Loan to a member of a microfinance group guaranteed by the group; creditors can collect from any group member.
Gross Receipts: Total income from microfinance operations, including interest, penalties, surcharges, commissions, discounts, service fees, and other charges.
Microcredit: Extension of microfinance loans to poor/low-income clients by a Microfinance NGO.
Microfinance: Providing a wide range of financial services to low-income people (microentrepreneurs) using nontraditional methodologies such as small loans and other services.
Microenterprise Development Strategy: (Inclusive growth focusing on poor); refers to programs empowering the poor, managing risks, and expanding access to microfinance (microcredit, microinsurance, microsavings, etc.) services and other development services.
Microinsurance: Financial services for the poor that minimizes risk protection needs; must not exceed specific percentage limits based on determined daily minimum wages in Metro Manila.
Microsavings: Program of a Microfinance NGO to collect small amounts from clients for compensating balance or capital buildup.
Microfinance NGOs: Non-stock, non-profit organizations registered with SEC to implement microenterprises.
Microfinance Operations: Programs and services listed in Rule 5, sections 1 and 2.
NEDA: National Economic and Development Authority—defines the low-income threshold.
Poor: Individuals/families below the poverty threshold.
Social Performance: Effective translation of a Microfinance NGO's mission into practice.
Social Welfare Promotion/Purposes: Activities designed to improve the living conditions of the poor, disadvantaged, vulnerable people.
SEC: Securities and Exchange Commission.

Rule 3: Microfinance NGO Regulatory Council

Comprised of 4 government sector and 3 NGO sector members as permanent members.
Chairman of the SEC.
Secretaries from DOF, DTI, and DSWD.
Nominations from organizations/associations of Microfinance NGOs.
Nominees must have 5 Microfinance NGO members involved.

Rule 4: Accreditation of Microfinance NGOs

Microfinance NGOs must be accredited by the council to receive incentives.
Accredited NGOs must have operated for 3 consecutive years.
NGOs must be registered as non-stock, non-profit corporations with at least ₱1,000,000.
Microfinance must be part of the corporation's name and bylaws.
Bylaws must specify nonprofit/nonstock status, microfinance as primary purpose, and that assets go to similar NGO/State in case of dissolution with no member profit/income.
Level of administrative expenses should not exceed 30% of total yearly costs.

Rule 5: Microfinance Programs and Services

NGOs are expected to provide at least microcredit/financial literacy, and micro-credit/CBU/microsavings.

Rule 6: Taxation of Microfinance NGOs

Microfinance NGOs can pay 2% tax on gross receipts from microfinance operations instead of all national taxes.
This only applies if it's their main purpose; and they are accredited.
Accreditation is essential to attain these tax benefits.

Rule 7: Maintenance of Books and Reportorial Requirements

Microfinance NGOs must use a standard chart of accounts.
NGOs must maintain required books of accounts from SEC and BIR.
NGOs are to publish and disclose audited financial accounts within 120 days of their financial year.

Rule 8: Access to Government Programs, Projects, and Technical Assistance

Accredited Microfinance NGOs receive access to related government programs/projects.
This includes capacity building support & grants.
NGOs must meet criteria from other relevant government agencies to avail of programs.

Rule 9: Administrative Sanctions

Microfinance NGO violations lead to sanctions defined by the council (fines, penalties).

Rule 10: Initiative of the BSP and IC to Examine Microfinance NGOs

BSP and IC can request the council to examine NGOs.
Review if operating outside their authority, thus revoke their accreditation.

Rule 11: Transitory Provisions

NGOs with no derogatory information are immediately accredited.
NGOs undergoing accreditation undergo a transitional period of 1 year.

Rule 12: Amendatory Provisions

SEC and the council can issue amendatory provisions or new rules for continuous improvement in NGO sustainability.

Rule 13: Separability and Effectivity

Rules that are deemed unconstitutional/invalid will have no effect; the valid sections remain in effect.
Rules and regulations come into effect 15 days after publication in a national newspaper.

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Description

Test your knowledge on the rules and regulations of the Microfinance NGOs Act (Republic Act No. 10693). This quiz covers key definitions and concepts related to microfinance organizations, their accreditation, and operational guidelines. See how well you understand the legislation governing microfinance in the Philippines.