More rural banks expand Micro Agricultural lending in Mindanao

MAP TrainingSix Mindanao rural banks completed the RBAP-MABS training course on Agricultural Microfinance (MAP) last April 7-9, 2011 in Butuan City. The training, which is the second part of a two-phase Agri MF workshop, equipped the participants with the necessary tools and systematic approach to complete their micro-agri loan product manual and financial projections.

Of the six rural banks that attended the training, five plan to introduce their Micro-Agri Product in their respective areas of operation by the second semester of the year. One will be rolling out its MAP product to more branches.

The April 7-9 training included the know-how, tools and techniques of validating proposed product features using the results of the market research conducted after the first phase of the training course. The course also included actual focus group discussions with bank clients engaged in farming, as well as procedures involved in finalizing the Micro Agri loan product manual.

Finally, the participants were trained on cash flow analysis for clients with dual loan accounts. They were taught on when to use the 60/40 amortization plan for micro-agri clients, where at least 60% of the loan is amortized regularly and the remaining amount (up to 40%) is payable lump sum upon crop harvest.

The USAID-supported RBAP-MABS Program assists rural banks in developing Agricultural Microfinance loan products and services for small farmers. This effort is supported by the Bangko Sentral ng Pilipinas (BSP), which issued Circular 680 in February 2010 to further encourage more rural banks to lend to this market. To date, there are 58 branches from 14 rural banks offering micro-agri loans to their clients. As of February 2011, these 14 rural banks have disbursed more than 51,000 cumulative micro-agri loans totaling more than P725 million to 21,000 new micro-agri loan borrowers.