The MABS-M Program An Overview

1. The MABS-M ProgramAn Overview

2. What is MABS-M? Microenterprise Access to Banking Services in Mindanao The MABS-M Program provides technical assistance and training to rural banks and cooperative rural banks in Mindanao. The project is designed to expand the delivery of financial services to microenterprises and households belonging to lower socio-economic groups

3. MABS-M Partners

4. The Opportunity for Rural Banks • Huge demand for financial services from microentrepreneurs and others from the lower socio-economic sector. • Pressure from commercial banks to move down market. • Microenterprise sector is less price conscious than service conscious. • Rural Banks know this market Profitable business opportunity

5. Project Goals By the end of the project, MABS-M will: • Reach a minimum of 40 rural and/or cooperative rural banks and bank branches • Assist each bank to extend at least 500 new microfinance loans and mobilize at least 1000 new microenterprise depositors • Ensure that the participating banks decide to make microfinance services a permanent and significant part of their portfolios • Institutionalize within RBAP a continuing capability to provide microfinance support services to member banks.

6. MABS Approach Each PB receives approximately 18 months of focused support and attention. Our approach includes workshops, seminars, on-the-job coaching, exposure and training visits, and technical assistance. The general pattern is one of building up and then phasing out the level of dedicated technical assistance and training.

7. Goals for Participating Banks • Development of products, practices, and procedures that follow microfinance best practice principles. • Implementation of a profitable microfinance line of business. • Development of the capacity to not only manage the microfinance operation but continually improve it.

8. MABS Approach Loan Products, Practices and Procedures • Generally uncollateralized loans starting as low as 5,000 pesos for existing businesses that generate daily cash flow. (Typical businesses include market vendors, home-based food processing and manufacturing, and restaurants.) • Comprehensive screening mechanisms to evaluate the CHARACTER of the client and his/her capacity to repay debt. • A management information system that allows next day follow-up of clients who miss payments. • Penalties and incentives to promote quality.

9. Savings Products and Procedures • Reduce transaction costs by increasing the average deposit amount, limiting the number of monthly transactions and transferring costs to the client (ganancia box). • Marketing programs to reach new clients (lottery, collections outside the bank). • Contractual savings plans. • Incentives for small savers to open accounts and increase their deposit balances.

10. MABS Approach Institutional Culture Reduce bank tolerance for past due loans: • Past due rate for rural banks exceeds 18%. Our goal with Participating Banks is Zero Delinquency. Improve client service: • Gain and retain clients through quality services such as rapid loan processing and field deposit collections.

11. MABS-M Results, January 31, 2000 4 Pilot Banks 10 Rollout Banks TOTAL Number Savings Accounts 6,739 9,829 3,036 4,125,541 6,154,381 10,279,922 Savings Account Balances No. Loans Disbursed 3,223 1,901 5,124 Amount Loans Disbursed 20,658,885 10,079,900 30,738,785 No. Active Loan Accounts 1,070 1,176 2,246 Loans Outstanding 4,689,969 4,232,939 8,922,908 6.0% 0.2% Past Due Rate

12. The MABS-M ProgramAn Overview