Microfinance Week 10: Sustainability and Impact

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Questions and Answers

What is the primary restriction placed on Microfinance NGOs regarding deposits?

They can only take deposits for specific loans.

They cannot undertake deposit-taking activities at any time. (correct)

They must take deposits from both clients and non-clients.

They are permitted to engage in deposit-taking activities.

What is the purpose of the Microfinance NGO Regulatory Council?

To facilitate deposit-taking for Microfinance NGOs.

To publish and disclose audited accounts of Microfinance NGOs.

To regulate the establishment of client loans only.

To oversee and establish standards for Microfinance NGOs. (correct)

What constitutes a Microfinance NGO being a 'net lender'?

Total loans exceed total equity build-up. (correct)

Total loans equal total equity build-up.

Total loans minus total equity build-up results in a negative figure.

Total loans equal total deposits.

Who are the permanent members of the Microfinance NGO Regulatory Council?

The Chairman of the SEC and three appointed members. Signup and view all the answers

What is not considered as deposit-taking in the context of Microfinance NGOs?

Taking of funds for loan equity build-up. Signup and view all the answers

What is a key benefit of innovation in microfinance for low-income clients?

Improved access to diverse financial services Signup and view all the answers

What is one challenge that microfinance institutions face as they aim for innovation?

Balancing profitability and social impact Signup and view all the answers

How does microfinance contribute to poverty alleviation in Indonesia?

Through increased financial service accessibility Signup and view all the answers

What is emphasized as a necessity for microfinance institutions to thrive?

Continued innovation Signup and view all the answers

What aspect of financial services do microfinance institutions need to improve according to the content?

Quality, scale, and efficiency Signup and view all the answers

What impact does the desire to reach the poorest clients have on microfinance efficiency?

It is negatively correlated with efficiency. Signup and view all the answers

What type of loan does innovation in microfinance aim to expand beyond?

Working capital loans Signup and view all the answers

What is a significant factor driving the need for innovation in microfinance?

Changing needs of clients Signup and view all the answers

What is one feature of a Microfinance NGO as outlined in the Social Reform and Poverty Alleviation Act?

It provides the poor access to flexible and reasonably priced financial services. Signup and view all the answers

Which of the following is NOT a characteristic of the services provided by Microfinance NGOs?

Investment in speculative ventures Signup and view all the answers

How does a Microfinance NGO assist in human development according to the outlined principles?

By promoting self-sustainability and empowerment among the poor Signup and view all the answers

What must a Microfinance NGO do to ensure sustainable operation?

Ensure it can recover all operational costs through services provided Signup and view all the answers

Which option best describes the purpose of compulsory savings collected by Microfinance NGOs?

To maintain operations and provide services to clients Signup and view all the answers

In what way does a Microfinance NGO seek to promote a spirit of generosity?

By adopting measures to encourage selfless giving Signup and view all the answers

Which of the following services is specifically mentioned as one provided by Microfinance NGOs?

Money transfer and remittance services Signup and view all the answers

What is one common governance requirement for Microfinance NGOs in financial operations?

They must maintain transparency and comprehensiveness in financial matters Signup and view all the answers

What type of development opportunities are Microfinance NGOs encouraged to provide?

Business development opportunities including entrepreneurial skills training Signup and view all the answers

What is the duration of accreditation for Microfinance NGOs certified by the SEC?

One year Signup and view all the answers

What main function does the Council perform in relation to Microfinance NGOs?

Establish standards of good corporate governance Signup and view all the answers

Which body is responsible for referring cases to examine Microfinance NGOs?

Bangko Sentral ng Pilipinas and Insurance Commission Signup and view all the answers

What is the maximum premium that can be computed daily for microfinance loans in relation to the daily minimum wage?

5% Signup and view all the answers

What are Microfinance NGOs required to implement according to their financial performance management responsibilities?

Asset-liability management and liquidity management Signup and view all the answers

Who is responsible for the implementation of credit/guarantee programs in the microfinance sector according to the content?

Government agencies Signup and view all the answers

Under which condition can the Council revoke the accreditation of Microfinance NGOs?

For good cause after review Signup and view all the answers

What principle is NOT listed as part of the good corporate governance standards for Microfinance NGOs?

Public ownership Signup and view all the answers

What is the primary target demographic for microfinance services mentioned in the content?

Economically-active, entrepreneurial poor Signup and view all the answers

What does social performance management entail for Microfinance NGOs?

Ensuring compliance with social impact standards Signup and view all the answers

Which organization is NOT mentioned as part of the regulatory framework for microfinance?

Public Health Department Signup and view all the answers

Which of the following is not a criteria for the accreditation of Microfinance NGOs?

Loyalty to investors Signup and view all the answers

What is the goal of the government in relation to the microfinance market?

To create a viable and sustainable private microfinance market Signup and view all the answers

What is the significance of the coverage limit set at 500 times the daily minimum wage?

It is designed to limit exposure for microfinance clients Signup and view all the answers

Which of the following roles do household-based entrepreneurs represent within the context of microfinance?

Economic contributors in the informal sector Signup and view all the answers

What underpins the necessity for a supportive policy environment in the microfinance sector?

To ensure effective access to financial products and services for the poor Signup and view all the answers

What is the primary focus of microfinance-oriented banks?

Serving the basic financial needs of disadvantaged sectors Signup and view all the answers

Which of the following statements about the capital requirements for microfinance-oriented banks is true?

The capital can be owned by private persons or multilateral entities. Signup and view all the answers

Who is responsible for supervising rural banks?

The Bangko Sentral ng Pilipinas (BSP) Signup and view all the answers

What can substitute banking experience for the president of a microfinance-oriented bank?

Microfinance experience Signup and view all the answers

What is a requirement for the organizers of microfinance-oriented banks?

They must meet branching requirements under specific regulations. Signup and view all the answers

Which of the following best describes the minimum capital requirement for microfinance-oriented banks?

It aligns with the capitalization requirements under Section 121. Signup and view all the answers

What sector do microfinance-oriented banks primarily serve?

Urban poor and low-income households Signup and view all the answers

What should the experience level be for the chief executive officer of a microfinance-oriented bank?

At least two years in banking and/or finance Signup and view all the answers

Study Notes

Week 10: Promoting Microfinance

Microfinance offers a competitive advantage by increasing access to financial services, encouraging entrepreneurship, and alleviating poverty.
It promotes access to financial services for the unbanked, empowering them to build individual and social capital.
Challenges include gender discrimination, financial stress, and trade-offs between outreach and financial performance in microfinance institutions.

The Way in Which Microfinance Deals with Sustainability Issues

Microfinance can alleviate poverty, but profitability and outreach to the poorest require balancing.
Economic uncertainty, including global crises and social unrest, impact the trade-off between profitability and outreach.
Microfinance efficiency sometimes inversely correlates with poor client outreach.
Improvements in health, education, and social standing result from microfinance, which leads to community and social capital development.
Microfinance programs can stimulate broader social and political changes, such as empowering people to run for political office or organize communities.

Microfinance Appreciation for Supervisors of Examination Divisions

The General Banking Law mandated recognizing microfinance and establishing regulations.
Banko Sentral ng Pilipinas institutionalized microfinance, driving sustainable development.

Enabling Policy and Regulatory Environment

Policy responsiveness of the BSP to microfinance practice developments.
Reviewing and updating implementation of existing regulations (rediscounting, branching, licensing.)
Welcoming innovations in service delivery/product designs.
Acknowledging microfinance's services (remittances, savings, etc.).

Training and Capacity Building

Capacity building initiatives to increase understanding, skills, and awareness of microfinance.
Initiatives for training and capacity-building programs for microfinance institution staff. Aimed at promoting sustainability in the long run.

Promoting Sustainable Microfinance Institutions and Programs

The BSP's advocacy for establishing linkages to help microfinance scale-up its programs..

Significance of Philippine Participation in the Micro Credit Summit

Microcredit Summit Campaign, an American non-profit, aims at alleviating poverty through microfinance.
The 2013 summit in the Philippines emphasized partnerships against poverty, with the country being highlighted for its strong microfinance regulatory framework and innovative approaches in microfinance and poverty alleviation.
Microcredit's role in poverty alleviation and promoting economic growth in the Philippines.
Case example of a for-profit lender in the outskirts of Manila, offering small, short-term, uncollateralized loans.

Laws in Support of the National Strategy for Microfinance

Regulations promote appropriate risk protection for the poor and microfinance outreach.
Financial inclusion is crucial, allowing access to financial services for everyone, including limited resource entities and individuals.

Microfinance in the Philippines

Principles behind the national strategy, including a greater private sector role, a supportive environment, market-oriented policies, and private sector involvement.
Micro-insurance, other similar products, and risk protection for low-income individuals. Microfinance programs serve the economically active and entrepreneurial poor.

Microfinance NGOs Act

Established a Microfinance NGO Regulatory Council to accredit microfinance institutions.
Defines core programs, microfinance principles, minimum standards for accreditation, financial management, social performance management, and governance standards.
Rules and regulations of the act, including terms, definitions, accreditation responsibilities, and social & financial performance standards.

Access to Government Programs and Projects

Duly accredited NGOs gain access to government support programs.
Support for Microfinance NGOs in sectors and areas with poverty or vulnerability to natural disasters, or armed conflict.
Operational and capacity building support, low-interest loans, and guarantee funds

Monetary Board

The Central Bank structure and responsibilities (monetary policy, regulation, supervision of banks)
The Monetary Board's unique legal status as not an incorporated body.
Seven-member board appointed by the President for six-year terms (with responsibilities for monetary policy, supervision, and assessment)
Monetary and Economics Sector (MES) and Financial Supervision Sector (FSS).
Payments and Currency Management Sector (PCMS).

Microfinance Oriented Bank

Criteria and benefits in establishing a microfinance-oriented bank (requirements, supervision protocols, provisions, guidelines).
Different types of banks (e.g. rural banks, cooperative banks, thrift banks).
Rules for establishing and operating microfinancing banks.

Remittances/Collections/Repayments

Collections and repayment procedures, deadlines, penalties, and relevant reports.
Rules and regulations for the Microfinance NGOs.

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Description

Explore the dual role of microfinance in promoting financial access and alleviating poverty. This quiz examines the challenges faced by microfinance institutions in balancing profitability and outreach to the poorest communities. Understand the social and economic impacts of microfinance on individual and community development.