By Lee C. Chipongian
In response to the COVID-19 crisis and resulting forced home quarantine, microfinance institutions are granting its borrowers a moratorium on loan payments.
“As an industry, we acknowledge that the nine million microentrepreneurs of our collective agencies will face liquidity problems and difficulty recovering losses should the COVID-19 threat persist. We pray the loan moratorium will in some way ease their burdens,” according to Microfinance Council of the Philippines (MCPI) chairperson, Eduardo Jimenez, and the president of Alliance of Philippine Partners in Enterprise Development (AP¬PEND) Dr. Virginia Juan.
Jimenez added: “While we all are at risk in the midst of the COVID-19 outbreak, our microfinance clients are even more vulnerable. Their micro businesses are shuttered, their income sure to suffer, even their children’s education have come to a halt with little or no access to online education.”
As of mid-2019, the outstanding microfinance loans from banks have reached ₱23.9 billion, which was 29.2 percent higher compared to same time in 2018, according to the Bangko Sentral ng Pilipinas.
Jimenez and Juan said microentrepreneur borrowers will be spared from making loan payments or be asked to pay penalties or fines for as long as the Luzon and other regions’ health crisis lockdown is in place.
Microfinance institutions are suspending all operations and other community services but will continue to monitor their client-beneficiaries’ social and health requirements. The salaries of the 50,000 microfinance employees will also be paid.
At the moment, both MCPI and APPEND are in discussion to come up with proposals that will “seek immediate and long-term support needed from the government.”
Microfinance include services such as deposits, loans, payment services, money transfers and insurance to the poor and low income households. Its loan products are designed specifically for microenterprises and small businesses.
Typically, microfinance is provided by thrift and rural banks.