Note: The data are provided for informational purposes only and in some cases, the information may be incomplete, not fully accurate or out of date. For more information on how data are compiled, see "A Note About Sources." The date of the last update for each country is marked in the section "Country Indicators." We welcome updates and comments. Click here to write to us.
Philippines
Country Indicators
Information Last Updated
April 2005
Population (Millions)
83 [2005]
Population Density (per sq km)
279 [2005]
GNI per capita (US$)
1300 [2005]
GNI per capita (PPP US$)
5300 [2005]
Total Unemployment (% of labor force)
10 [2001]
Employment in Agriculture (% of total employment)
37 [2001]
Gross domestic saving (% of GDP)
15 [2005]
% Population under $2/day (PPP)
46.4 [2000]
Depth of Financial Sector (M2/GDP)
52 [2005]
Exchange rate
1 USD : 56.25341 PHP, as of 25 February 2004
Formal and Semi-Formal Sources of Microfinance
Thrift and rural banks, cooperative banks, credit unions, and NGOs.
Traders, input-suppliers, money-lenders, ROSCAs, and ASCAs.
Central Bank of the Philippines Circular No. 272 (2001) defines microfinance as small loans given to the poor and low-income houses to raise income levels and living standards. Loans are unsecured and based on cash flow analysis and do not exceed US $2,667 [150,000 PHP]. The schedule of loan amortizations and the terms and conditions of the loan should take the borrower’s projected cash flow into consideration. Hence, microfinance loans may be amortized on a daily, weekly, bi-monthly or monthly basis.
NGO microfinance provider formalization or transformation issues
Existing microfinance organizations have legal authority to apply to become microfinance thrift or rural banks, provided capitalization requirements are met with and the geographical area is not fully served by a rural bank. (Circular No. 273, 2001)
Safety net availability: insurance, pension, etc.
Philippine Deposit Insurance System (for depositors in BSP licensed institutions)
» The Philippines in "The Role of Central Banks in Microfinance in Asia and the Pacific"
Llanto, Gilberto M. (2002)
John Conroy, et al., eds.
Manila: Asian Development Bank
A joint stock company which is engaged in the business of publicly accepting deposits and uses these funds to make loans and investments for farmers and merchants, and the people of rural communities
Thrift banks shall include savings and mortgage banks, private development banks, and stock savings and loans associations organized under existing laws, and any banking corporation that may be organized for accepting deposits, making loans, providing short-term working capital, medium- and long-term financing, to businesses engaged in agriculture, services, industry and housing
Registered association of persons with a common bond of interest who have voluntarily joined together to achieve goal, making equitable contributions to the capital required and accepting a fair share of the risks and benefits of the undertaking in accordance with
universally accepted cooperative principles.
Directors and officers must be “fit and proper.” Directors must be Filipino citizens. Fines and/or jail time imposed on violators. For rural banks set up as microfinance banks, 20% of paid-in capital must be owned by persons with track records in microfinance, and majority of board must have microfinance experience. (See Circular no. 273 (Feb 2001))
Vision and mission statement showing commitment to reaching low-income clients required to register as microfinance bank. (See Circular no. 273 (Feb 2001))
Board will be between 5 and 15 persons, 2 of whom are independent from the bank. Directors and officers must be “fit and proper.” No public officials can serve as officers of private banks (unless public funding provided).
For thrift banks set up as microfinance banks, 20% of paid-in capital must be owned by persons with track records in microfinance and majority of board must have microfinance experience. (See Circular no. 273 (Feb 2001))
Vision and mission statement showing commitment to reaching low-income clients required to register as microfinance bank. (See Circular no. 273 (Feb 2001))
Board will be between 5 and 15 members elected by the general assembly for a term fixed in the bylaws but not exceeding 2 years. No director may serve for more than three consecutive terms. (See Cooperatives Code (Act No.6939) 1990, Art. 38)
Capital and Reserves
Minimum capital
Minimum capital adequacy/gearing ratios
Forms of capital recognized
Risk-weighting of assets
Loan loss provisioning, write-off
Reserves, Liquidity requirements
Banks
Rural Banks
US $56,888 (3.2 million PHP) to US $568,888 (32 million PHP) depending on location. For rural banks established as microfinance banks, US $88,888 (5 million PHP) or local requirement, whichever is higher. (See Bangko Sentral ng Pilipinas (BSP)Manual of Regulation for Banks, Appendix 37)
In the case of a rural bank to be established as a microfinance bank, the minimum capital shall be US $88,8888(5 million PHP) or the applicable existing capitalization requirement, whichever is higher. (See Circular no. 273 (Feb 2001))
Tier 1 (core) capital consists of:
Common and preferred stock and their distributable dividends, surplus and surplus reserves, and undivided profits (for domestic banks only)
Tier 2 (supplementary) capital consists of:
(a) Paid-up perpetual and cumulative preferred stock
(b) Paid-up limited life redeemable preferred stock issued with the condition that redemption thereof shall be allowed only if the shares redeemed are replaced with at least an equivalent amount of newly paid-in shares
Tier 1 (core) capital consists of:
Common and preferred stock and their distributable dividends, surplus and surplus reserves, and undivided profits (for domestic banks only)
Tier 2 (supplementary) capital consists of:
(a) Paid-up perpetual and cumulative preferred stock
(b) Paid-up limited life redeemable preferred stock issued with the condition that redemption thereof shall be allowed only if the shares redeemed are replaced with at least an equivalent amount of newly paid-in shares
A bank has to establish the risk component of the balance sheet and off-balance sheet items according to the classification: 0%, 20%, 50% and 100% of risk-weighted assets
Working capital of at least US $10,000 (562,500 PHP) (PCFC)
N/A
Risk Management Guidelines
Guidelines & restrictions on financial services
Guidelines & restrictions on operational rules
Guidelines & restrictions on interest rates
Concentration of risk
Connected/insider business
Banks
Rural Banks
Permitted: Savings deposits and loans, rediscounting of paper, checking and NOW accounts with prior Bangko Sentral ng Pilipinas (BSP) approval and higher minimum capital
Prohibited: insurance
Operating hours: Min. 6 hours per working day, notice to BSP if open on non-working days
BSP may prescribe loan rates, maturities, security requirements. Rates on microfinance loans shall not be below market.
To be registered as microfinance bank, 50% of gross loan portfolio must be as microfinance loans. Loans to deposit ratio of at least 75%. (See Circular no. 282 (April 2001))
Loans/guarantees to officers or related interests only with written approval of majority of bank directors, and not on preferential terms
Limit = the bank’s unencumbered deposits and paid-in capital
Thrift Banks
Permitted: Savings deposits and loans; demand deposits only with prior BSP approval
Prohibited: Insurance
Operating hours: Min. 6 hours per working day, notice to BSP if open on non-working days
BSP may prescribe loan rates, maturities, security requirements. Rates on microfinance loans shall not be below market.
To be registered as microfinance bank, 50% of gross loan portfolio must be as microfinance loans.
Loans/guarantees to officers or related interests only with written approval of majority of bank directors, and not on preferential terms
Limit = the bank’s unencumbered deposits and paid-in capital
Cooperatives/Credit Unions
Credit Unions
Permitted: Savings, deposits, investments in securities issued or guaranteed by the Government and making loans from/to members
No interest rate ceilings
Non-profit institutions
NGO-MFIs
Permitted: Microfinance loans
Prohibited: Public deposit-taking
Reporting and Supervision
Supervision Method
Supervision costs and fees
Disclosure and reporting requirements
Depositor protection mechanisms (e.g., deposit insurance or lender of last resort)
Banks
Rural Banks
Regular onsite examination, offsite reviews as required. Examinations include wholly-owned or controlled companies. Bangko Sentral ng Pilipinas (BSP) may place banks in conservatorship, intervene in liquidations.
Annual supervision fees paid to BSP not to exceed 1/40 of 1% of average total assets.
To offer microfinance, bank must have daily monitoring of loan releases, collection, and arrearages. BSP may require external audit. Quarterly financial statements sent to BSP and published in newspaper
Philippine Deposit Insurance Corp. covers up to US $2,000 (112,500 PHP) per depositor, per bank. Quarterly collection of 0.5% of average deposit liabilities as a deposit insurance fee.
Thrift Banks
Regular onsite examination, offsite reviews as required. Examinations include wholly-owned or controlled companies. BSP may place banks in conservatorship, intervene in liquidations.
To offer microfinance, bank must have daily monitoring of loan releases, collection, and arrearages. BSP may require external audit. Quarterly financial statements sent to BSP and published in newspaper
Philippine Deposit Insurance Corp. covers up to US $2,000 (112,500 PHP) per depositor, per bank. Quarterly collection of 0.5% of average deposit liabilities as a deposit insurance fee.
Cooperatives/Credit Unions
Credit Unions
Cooperatives shall be subject to an annual audit by an auditor who is independent of the cooperative being audited and of any of its subsidiaries and is a member of any recognized professional accounting or cooperative auditors’ association with similar qualifications. (See Cooperatives Code (Act No.6939) 1990, Art. 81)
Annual financial statements to CDA (not always enforced).
No access to Philippines Deposit Insurance Corp.
Non-profit institutions
NGO-MFIs
PCFC: Delegated supervision
Other: MFI networks monitor adherence to standards
Tax Treatment
Taxes on Income
Taxes on Transactions
Other
Banks
Banks and Credit Institutions
Thrift and rural banks are tax-exempt from all taxes except corporate income tax for first five years of operations.
General Applicability
General Applicability
Corporate income tax rate (2005): 32%; branch profits remittance tax: 15%. Individual income tax rate: progressive, 5% -32%; capital gains are taxed as income. [All information in this section from Deloitte, 2005.]
VAT: 10% (Standard); 2% (Municipal Sale).
Dividends and royalties: 32%; interest: 20%.
Other Relevant Business Legislation
Security interests: Forms accepted
Security interests: Valuation
Competition/Consumer protection rules: standard disclosure formats
