Bank of the Philippine Islands
Banking with the poor

Rodolfo Bajar is a man with a humble business plan: make rice scoops and melon scrapers from stainless steel. When he learned about a non-profit organization offering loans no greater than P10,000, he went to the facility's De La Salle Micro branch and applied for one. The benefit was immediate and significant.

"Today I have enough money to buy four kilos, instead of one kilo, of stainless steel at a time. I can now make more scrapers and sell more," he said.

Bajar is one of the country's many "micro-entrepreneurs." They are small market vendors, owners of sari-sari stores and bakeries, tricycle drivers, and craftsmen. And they are changing the quality of their lives through micro-financing.

BPI Foundation, the social responsibility arm of the Bank of the Philippine Islands, has been helping these individuals achieve their dreams for more than 15 years. A pioneer in micro-financing, BPI Foundation provides a credit line for non-government organizations and cooperatives that seek to uplift the lives of Filipinos in need.

The bank foundation's micro-financing program called Financing Assistant Line (FAL) began in the 1980s with a breakthrough partnership with Tulay sa Pag-Unlad, Inc, now known as TSPI Development Corporation. BPI initially provided the non-profit grassroots foundation half-a-million pesos of credit line as loan capital for investment in small enterprise projects. It also sponsored the training of TSPI's evaluation and collection staff.

The success of Bajar and recipients of such loans show that capital and training programs go a long way towards helping microfinance institutions fulfill the needs of the poor.

BPI has been partnering with MFIs since the establishment of the FAL program for non-government organizations and cooperatives. Some of these organizations include TSPI; VICTO, a network of Visayas-based cooperatives. Ahon sa Hirap, Inc.; and Center for Agricultural and Rural Development (CARD).

"Encouraging and supporting the Filipino entrepreneurial spirit is the most practical and effective way of helping our countrymen with limited resources," says Jody de la Cruz, vice-president for microfinance of BPI. "We believe that thses institutions are in the best position to handle microlending activities because they provide microentrepreneurs with access to formal financial markets."

Thousands have since benefited from BPI Foundation's support of microfinance institutions, proving that the poor are credit-worthy given the right mechanisms in place. The outcome is direct and widespread, and the many beneficiaries include market vendors, rice retailers, newspaper peddlers, fishball vendors, tricycle drivers, and crafts workers.

To date, BPI Foundation has extended credit of more than P234 million to more thatn 47,000 entrepreneus and 35 microfinancing institutions and individuals. All these beneficiaries represent the future entrepreneurs who will create jobs and accelerate development from the bottom ip.

It has likewise organized financial literacy and credit responsibility seminars through the 'Show Me, Teach Me SME' Program (SME is short for small and medium enterprise) for entrepreneurs.

Today, BPI has a dedicated Microfinance Unit within its corporate banking division. It aims to look for ways to deepen the bank's involvement in developing microenterprises. BPI's Microfinance Program offers services to MFIs under four main components: wholesale loans for portfolio relending' development capacity-building loans through the BPI Foundation; business solutions in electronic cash management; and partnerships with local and international development-oriented organizations.

In 2006, BPI Foundation engaged the Rural Bankers Association of the Philippines (RBAP) as a partner to provide training in microfinance operations for rural bank officers and staff as well as to deliver enhancements to their microfinance information systems through the Microenterprise Access to Banking Services program of the RBAP and the United States Agency for International Development (USAID). BPI also forged a two-year partnership with the Ateneo Development Studies for the capacity-building program of microfinance institutions including staff training and strengthening of MFI's operations.

"As microentrepreneurs increase their incomes so does the country come closer to achieving its goal of alleviating poverty," says de la Cruz. "BPI remains committed to help microfinance institutions make their clients' growing businesses more productive and competitive."