Friday, September 9, 2016

IRR: MICROFINANCE NGOs ACT INKED





MICROFINANCE NGOs ACT IMPLEMENTING RULES SIGNED
Chairperson Teresita J. Herbosa of the Securities and Exchange Commission
(SEC), Secretary Carlos F. Dominguez of the Department of Finance
(DOF)
,
Secretary Ramon M. Lopez of the Depar
tment of Trade and Industry(DTI)
, and
Secretary Judy M. Taguiwalo of the Department of Social Welfare and Development
(DSWD)
recently signed The Implementing Rules and Regulations (IRR) for
Republic Act No. 10693 or the Microfinance NGOs Act at the Ayuntam
iento Building
in Intramuros, Manila.
The signing of the IRR was also attended by Senator Paolo Benigno Aquino IV,
Congressman Pablo R. Nava III, and members of the Microfinance Council of the
Philippines Inc. and APPEND Inc., the two largest microfinance
networks in the
country.
The Microfinance NGOs Act aims to help in poverty eradication by supporting and
working in partnership with qualified NGOs in promoting financially inclusive and pro
-
poor financial and credit services.
T
he Microfinance NGO
s
Act
covers only microfinance non
-
government organizations,
and does not cover for
-
profit microfinance institutions.
The following are the
salient features
of the law and its IRR:
Microfinance NGO Regulatory Council.
The Council will serve as an accreditation
body for Microfinance NGOs and, as such, it will also institute and operationalize a
system of accreditation for Microfinance NGOs. The Council will set up the criteria
for accreditation which shall include sound and measurable standards of financial
perfo
rmance, social performance
, audit
and governance.
It shall also monitor the performance of the said NGOs to ensure their continuing
compliance with the accreditation standards.
It has authority to audit the books of
accounts, records and papers of Microfi
nance NGOs and conduct ocular
inspections.
Corporate Governance and Finance Depart
ment
Ground Floor,
PICC Secretariat Building
Philippine International Convention Center (PICC) Complex
1307
Pasay City
Phone : (02)
8
18
-
6103
; 818
-
5
990
It is also empowered to place under probation, suspend or revoke any certificate of
accreditation upon due determination that a Microfinance NGO no longer meets any
of the criteria for accreditation.
The Counci
l will be composed of four (4) permanent members and three (3)
members from the Microfinance NGO sector. The four (4) permanent members are:
the SEC Chairman or designated representative who shall act as the Chairman of
the Council; the DOF Secretary or re
presentative; the DTI Secretary or
representative; and, the DSWD Secretary or representative.
The three (3) members from the private sector shall be nominated and chosen in
accordance
with
the rules as specified in the IRR.
The said representatives shall
serve for a term of three (3) years who may be reappointed
.
Accreditation of Microfinance NGOs.
To be eligible for accreditation, a Microfinance
NGO must be a
non
-
stock, non
-
profit corporation with a capital contribution of at least
PhP 1 million
. It mus
t
have primary purpose of implementing a microenterprise
development strategy and providing microfinance programs, products and services
for the poor
. It must h
ave basic minimum core programs and services.
O
nly
Microfinance NGOs that have been operating fo
r at least three (3) consecutive years
may be accredited.
Benefits of A
ccreditation.
Only accredited Microfinance NGOs are eligible to avail
of the incentives under the law.
An accredited
Microfinance NGO shall be eligible to
a preferential tax treatment
. It shall also have access to government programs and
projects as well as any form of technical assistance from the government, donors
and other support organizations.
Taxation.
The preferential tax treatment shall be accorded only to NGOs whose
primary
purpose is microfinance and only on their microfinance operations catering
to the poor and low
-
income individuals. The preferential
rate of two percent (2%) tax
based on gross receipts from microfinance operations should only refer to lending
activities an
d insurance commission which are bundled and forming integral part of
the qualified lending activi
ties of the Microfinance NGOs.
All other income by the
Microfinance NGO which are not generated from the lending activities and insurance
commissions, shall b
e subject to all applicable taxes.
Corporate Governance and Finance Depart
ment
Ground Floor,
PICC Secretariat Building
Philippine International Convention Center (PICC) Complex
1307
Pasay City
Phone : (02)
8
18
-
6103
; 818
-
5
990
Minimum Core Programs and Services.
Microfinance NGOs must have at least
any of the following programs, products or services:
1.
Microcredit and financial literacy programs; and
2.
Microcredit and
Capital Build
-
Up (
CBU
)
or
microsavings.
A Microfinance NGO may grant microfinance loans in such amounts as may be
prescribed by the Council and subject to such reasonable and conscionable interest
rates and charges as may be agreed upon between the Microfinance NGO and its
client.
In the extension of credit, the Microfinance NGO must also comply with the
provisions of the Truth in Lending Act.
Other Services of Microfinance NGOs.
Although Microfinance NGOs are
prohibited from engaging in deposit
-
taking activities, they may collec
t microsavings
or capital build
-
up from their clients only for purposes of maintaining a compensating
balance.
Microfinance NGOs may also partner with microinsurance companies, agents and/or
entities in furtherance of their social protection objectives b
ut they cannot directly
engage in the insurance business.
Secretariat.
At present, the SEC Corporate Governance and Finance Department
(CGFD) is providing technical and administrative support to the
Microfinance NGO
Regulatory Council.
The signed copy o
f the
Implementing Rules and Regulations (IRR)
maybe accessed
through the SEC website.
http://www.sec.gov.ph/wp
-
content/uploads/2015/08/2016IRRMicroinanceAct.pdf
END

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