Slows down branch expansion
BPI Direct BanKo (BanKo), the savings bank subsidiary of Bank of the Philippine Islands (BPI) specializing in micro enterprises financing for as low as P25,000 up to P150,000 collateral-free, is targeting the grant of P7 billion micro loans this year to help micro entrepreneurs recover from the impact of the pandemic despite continued scaling down of its planned nationwide branch expansion as deployment remains challenging due to continuing movement restrictions.
Rod Mabiasen senior vice-president of BPI Direct BanKo said during the “Lending Solutions for MSMEs Webinar Series” of the Philippine Chamber of Commerce and Industry they are targeting to grant P7 billion micro enterprise loans in 2021, or P1 billion higher than the P6 billion loans they granted to micro entrepreneurs last year.
Despite the higher loan target, Mabiasen said they will cut back planned opening of branches this year because of deployment difficulties for their marketing teams. He said they may be limited to the opening of 5 branches only this year and rescheduled or put on hold the rest. Each branch is manned by 8-10 people depending on the market that they cater to.
BanKo has been aggressively opening 100 branches annually since their operation in 2016. They now have 305 branches nationwide. In January-February last year, he said, the company had an aggressive operation but was cut short by the lockdowns in March, forcing them to stop the construction of 100 branches.
But lending did not stop. In fact, Mabiasen said that BanKo was directed by their head office BPI to resume lending during the pandemic year to help micro entrepreneurs, the most affected sector during the pandemic. As a result, BanKo was able to approve P6 billion micro financing loans in 2020 alone.
He explained that micro entrepreneurs were the most affected in 2020 because they operate on a weekly basis. Most of them had to close for months and don’t have capital to reopen their small business.
To help micro entrepreneurs, BanKo had to set up a rehab fund for existing clients with existing loans to enable them to get additional financing to reopen their businesses. BanKo also offered term extension program or loan restructuring, grace period and extended the repayment to make it more affordable.
To date, BanKo has over 100,000 active borrowers. According to Mabiasen, there are about 5 million households doing micro business of which BanKo is targeting to extend financing to 2.5 million households with P15,000 and above monthly income.
Mabiasen explained that BanKo, a formal loan financing for micro enterprises, offers easy and fast release for minimum collateral-free loan amount of P25,000 up to P150,000. All a borrower has to do is visit the nearest BanKo branch, scan its QR code for digital filing or approach any of the BanKo Pares and BanKo Mares who visit in their public markets for application forms. The applicant only needs to submit four documents: Mayor’s permit or barangay clearance, a valid ID, a utility bill, and 2x2 photo.
Once the documents are completed, a credit investigation officer will be deployed to the address to assess their business income and inventory. The loan is approved within 3 days or 5 days maximum. Once approved, the borrower is issued a BanKo savings account that he can use to pay for the loan or withdraw the amount to pay for his suppliers. BanKo has also over 1,000 cash agents or payment centers, including Palawan Express and Tambunting Pawnshops, where clients can load or fund their accounts. Other than loan financing, BanKo also offers insurance and savings requirements.
Most of the micro enterprises they cater to are palengke stall owners, farmers/businessmen that sell their produce, service mechanics, barber shops, salons, restaurants, craftsmen and many agri-businesses, light manufacturers like furniture/cabinet makers that do not only retail their products but supply to contractors, among others.
For loans of more than P150,000, BanKo requires collateral in terms by way of asset assignment. These assets include motorcycles, trucks, vans, ovens or anything with value that are not brand new, as long as they in working condition. Loans can be done via self-repayment to any of the BanKo branches, post dated checks or motorized collection.
A loan of P100,000 payable over 12 months has a monthly repayment of P10,500 and P6,400 monthly for 24 months. For the past 4 years of operation, BanKo was able to build its loan portfolio and has already released P18 billion loans to clients. Its accomplishments have been recognized by various institutions.
“In the last 4 years as we built the micro loans for small business were able to capture 17 percent of total micro finance loans issued by banks,” said Mabiasen.
Mabiasen cited the Best Micro Financé Initiative recognition given by Asian Banker in 2017 as its greatest accomplishment as it was given a year after they started operation.BanKo was also recognized by Asia Money as Best Micro Finance Bank in 2019.
BanKo is the product of a merger between two specialized thrift bank units of the Bank of the Philippine Islands: BPI DirectSavings Bank (the Philippines’ first internet bank), and BPI Globe BanKO (the country’s first mobile savings bank).