MICROFINANCE EXPERIENCE

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The City of Malaybalay
Bukidnon Coop Bank Institutional Profile
Previous Microfinance Experience of BCB
BCB’s Present Microfinance Experience
Features of BCB’s Microfinance Product
Performance of SIKAP Program for the First
Three Months Pilot Test

The City of Malaybalay
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First City in the Province of Bukidnon
Capital of the Province of Bukidnon
44 barangays
Total population of 105,459 as of 1998
Total of 12,354 households as of 1998
Primary source of income: Farming &Trading

The City of Malaybalay
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Has 6 commercial banks
Has 2 Rural Banks
Has 2 active credit cooperatives
Has several pawnshops & lending investors
Has 1,795 registered business establishments as of January, 1999

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First coop bank in Mindanao
1998 Gawad Pitak Awardee as # 1
Coop Bank in the country
Established in 1977
Has 4 branches including main office
( Valencia, Maramag, Quezon )
Total resources of P80,479,999.98
Has 35 employees; 19 in main office,
16 in 3 branches

BCB (Main Office) Organizational Chart
Board of Directors
General Manager
Accountant Cashier
Bookkeepers
Tellers/
Solicitors
Account Officers
Regular Loans
Loans Officer
MF Supervisor
Account Officers
Microfinance

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Deposits
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Savings- P8,283,337.81
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Time -P16,086,090.55
Loans
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Agricultural - P34,906,242.38
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Commercial - P9,817,702.16
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Other Loans
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P9,529,383.46
P54,253,328.00

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BCB previously offered two microfinance products:
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Market Vendors’ Loans
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Motorela & Multicab Maintenance Loans

LOAN FEATURES
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Introduced for stall owners in 1979
Clean loan up to P5,000.00
Above P5,000.00 is collateralized
Payable in 6-12 mos with 12% p.a. interest
Collected daily/weekly/monthly/lumpsum
Deposit required before loan availment but no deposit build up thereafter.

LOAN FEATURES
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Intended for motorela & multicab operators
Loans up to P15,000.00, with Chattel
Mortgage or Real Estate Mortgage
Payable in 6 moths to 1 year, mostly lump sum upon maturity
Pre-paid interest of 22% p.a.

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No product manual or guidelines
Past Due Ratio of more than 50%
Savings Deposits became dormant
Market value of tricycle mortgaged not sufficient to cover loan upon foreclosure
Product was stopped by the bank after 2 years

AS PARTICIPANT BANK OF THE
MABS-M PROGRAM

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High operating cost & manpower intensive
Small loan amounts mean lower profit
Risky since it’s clean & caters to small clients
Market for small entrepreneurs is already saturated by informal moneylenders

Factors that Convinced the Bank to
Resume its Microfinance Activity
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Micro borrowers are not interest conscious
Close monitoring, clear guidelines & deposit build up mitigate risk
Frequent collection = high effective income
Bank’s bad experiences in big loans
Technical assistance from MABS-M will instill new discipline in implementing the product

Sariling Impok, Kita at
Pag-asenso ( S I K A P )

Sariling Impok, Kita at Pag-asenso
( S I K A P )
PRODUCT FEATURES
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Intended for microentrepreneurs
Loan sizes of P3,000.00 up to P10,000.00 for first time borrowers
3% monthly interest amortized equally
3% service fee deducted up front
Loan term : 30, 60 & 90 days
Mode of payment : daily & weekly
Pick up service for loan payments & deposit

PRODUCT FEATURES
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Loan Security :
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P3,000.00 - P15,000.00 ; two co-makers only
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P15,001.00 - P25,000.00 ; two co-makers plus
Deed of Assignment of Deposits
Above P25,000.00 - REM or Chattel Mortgage
Deposit Build up:
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Initial deposit at least equivalent to 5% of loan
Regular deposits to go with each loan payment

Sariling Impok, Kita at
Pag-Asenso ( S I K A P )
INCENTIVES TO GOOD PAYORS
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Eligibility ( not automatic ) for bigger loan within discounted debt capacity
1/2% reduction of interest rate subject to
Manager’s approval
Immediate release of repeat loan upon full payment of existing loan

ACCOMPLISHMENTS OF SIKAP
LOAN FOR THE FIRST 3
MONTHS PILOT TEST
Number of Active Borrowers and
Outstanding Depositors
Aug-99 Sep-99 Oct-99 Nov-99 Dec-99
450
400
350
300
250
200
150
100
50
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Active
Borrowers
Active
Depositors

PERFORMANCE OF SIKAP LOAN
PROGRAM FOR THE FIRST 3
MONTHS PILOT TEST
Amount of Loan and Deposit Portfolio
500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
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Aug-99 Sep-99 Oct-99 Nov-99 Dec-99
Loan Portfolio
Balance
Deposit
Balance

SIGNIFICANT THINGS
LEARNED FROM THE MABS-M
PROGRAM
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Market study prior to product design
Product designed according to market needs
Loan administration procedures documented in the Product Manual
All borrowers are required to attend Client Orientation
Loan forms are properly filled up

SIGNIFICANT THINGS
LEARNED FROM THE MABS-M
PROGRAM
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Thorough character and credit checking
Thorough cash flow evaluation
Very conservative determination of debt capacity
Simplified & fast processing of loan releases
Zero tolerance to delinquency

SIGNIFICANT THINGS LEARNED
FROM THE MABS-M PROGRAM
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ALARM SIGNALS IN MANAGING
DELINQUENT PAYORS

ALARM SIGNALS & RECOMMENDATIONS
ALARM SIGNAL #1
PAYMENT DELAYED 1 DAY
LOANS STAFF REPORTS TO SUPERVISOR
ALARM SIGNAL # 2
PAYMENT DELAYED 3 DAYS
SUPERVISOR VISITS OVERDUE CLIENT
ALARM SIGNAL # 3
PAYMENT DELAYED 1 WEEK
INFORMS CO-MAKER ; FIRST LETTER
ALARM SIGNAL # 4
PAYMENT DELAYED 2 WEEKS
SECOND WARNING LETTER
ALARM SIGNAL # 5
PAYMENT DELAYED 3 WEEKS
FINAL LETTER FROM MANAGER
ALARM SIGNAL # 6
PAYMENT DELAYED 4 WEEKS
IMPOSE CHATTEL; KASABUTAN

“ There is no truth to the saying that the poor does not pay or cannot save.
All it takes is discipline which should first come from the bank. Our failures in handling microfinance in the past was mainly caused by the poor product design and our laxity in handling collections.”
-Mr. Romy Garcia, Chairman