serving the bottom of the pyramid market - adfiap

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TARGETING THE “BOTTOM OF THE PYRAMID” Ma. Lourdes S. Pineda Senior Vice-President/ Head, Microfinance Rizal Commercial Banking Corp. (RCBC) Philippines Session 3 : Regulatory Structures for Efficient Financial Markets

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Page 1: SERVING THE BOTTOM OF THE PYRAMID MARKET - ADFIAP

TARGETING THE

“BOTTOM OF THE PYRAMID”

Ma. Lourdes S. Pineda

Senior Vice-President/ Head, Microfinance

Rizal Commercial Banking Corp. (RCBC)

Philippines

Session 3 : Regulatory Structures for Efficient Financial Markets

Page 2: SERVING THE BOTTOM OF THE PYRAMID MARKET - ADFIAP

The Philippine Microfinance

Regulatory Environment

Agenda

The Microenterprise Sector

The 5 C’s of Credit and the

Microentrepreneur

RCBC Microfinance Initiative

A focused look at the microenterprise sector

Page 3: SERVING THE BOTTOM OF THE PYRAMID MARKET - ADFIAP

“THE BOTTOM OF THE PYRAMID”

Population (in millions)

75 – 100

1,500 – 1,750

4,000

Source : The Fortune at the BOP, by C.K. Prahalad

Page 4: SERVING THE BOTTOM OF THE PYRAMID MARKET - ADFIAP

5 C’s of Credit - Character

Without/Limited access to

formal sources of credit /

No credit history

Page 5: SERVING THE BOTTOM OF THE PYRAMID MARKET - ADFIAP

5 C’s of Credit - Capacity

Few employees (0-9),

Usually family members

Family and business are

considered as one

Multiple

income-generation

activities

Basic or no

Business records

Basic financial

skills

Page 6: SERVING THE BOTTOM OF THE PYRAMID MARKET - ADFIAP

5 C’s of Credit - Capital

Small volume of

operations

Page 7: SERVING THE BOTTOM OF THE PYRAMID MARKET - ADFIAP

5 C’s of Credit – Collateral

Rudimentary / obsolete

equipment

No marketable

collaterals to offer

Page 8: SERVING THE BOTTOM OF THE PYRAMID MARKET - ADFIAP

5 C’s of Credit - Condition

Low educational

level

Page 9: SERVING THE BOTTOM OF THE PYRAMID MARKET - ADFIAP

PROFILE OF A MICROENTREPRENEUR

Small volume of

operations

Few employees (0-9),

Usually family members

Rudimentary / obsolete

equipment

Family and business are

considered as one

Multiple

income-generation

activities

Low educational

level

No marketable

collaterals to offer

Basic or no

Business records

Basic financial

skills

Without/Limited access to

formal sources of credit /

No credit history

Page 10: SERVING THE BOTTOM OF THE PYRAMID MARKET - ADFIAP

Philippine Laws & Regulations

• Republic Act 8425

• Bangko Central Circular 272

Page 11: SERVING THE BOTTOM OF THE PYRAMID MARKET - ADFIAP

BSP Circular No. 272 (2001)

Guidelines on Microfinance Loans:

1. Cash flow-based; typically unsecured

2. Maximum principal amount not exceeding P150,000

(USD $ 3,480)

3. Repayment frequency, depending on cash flow

4. Reasonable interest rate

5. Audited/un-audited FS not required

6. Exempted from rules governing unsecured loans.

Page 12: SERVING THE BOTTOM OF THE PYRAMID MARKET - ADFIAP

RCBC’S MICROFINANCE INITIATIVE

“Helping people help themselves”

Page 13: SERVING THE BOTTOM OF THE PYRAMID MARKET - ADFIAP

WHERE WE OPERATE

RIZAL MICROBANK

November 2010

PRES. JOSE P. LAUREL

RURAL BANK

July 2009

Page 14: SERVING THE BOTTOM OF THE PYRAMID MARKET - ADFIAP

PERFORMANCE DATA

As of May 31, 2011(USD $1.00 = PhP 43.11)

Lending Methodology Individual Lending

Lending Units 12

Cumulative Loan Disbursement USD $ 5.06 million

Number of Loans Disbursed 4,762

Average Loan Size USD $ 1,063

Average Loan Term 4 months

Outstanding Loan Portfolio USD $ 837 thousand

Active Borrowers 915

Portfolio-at-Risk (PAR >1 day) 0.43%

Page 15: SERVING THE BOTTOM OF THE PYRAMID MARKET - ADFIAP

PORTFOLIO DISTRIBUTION

Page 16: SERVING THE BOTTOM OF THE PYRAMID MARKET - ADFIAP

THANK YOU!