Section 6Sec./Art. 6

Basic Features and Purposes of Microfinance NGOs. A Microfinance NGO shall have the following features and purposes:

(a) Provides the poor direct access to reasonable and affordable credit and related programs and services which shall include, but shall not be limited to, microfinance, microinsurance, microenterprise development, health care, and microhousing, subject to existing laws and regulations;

(b) Provides business development opportunities such as leadership training and entrepreneurial skills enhancement;

(c) Provides human development services to help the poor achieve a level of sustainability and empowerment, and adopts measures to promote a spirit of generosity and selfless giving among individuals and institutions that shall help support programs directly involved in poverty eradication;

(d) Collects compulsory savings or CBU only from its clients for purposes of maintaining the compensating balance in relation to the same clients loan. Acceptance of client savings for this purpose shall not cause the Microfinance NGO to be deemed engaged in deposit-taking operations;

A Microfinance NGO shall not, at any time, undertake deposit-taking activities.

For the purpose of implementing this provision, deposit-taking shall not include taking of funds from current or prospective borrowers for the purpose of equity build-up of an individual borrowers own loans. A Microfinance NGO shall be a net lender at all times, wherein net loans mean total loans minus total equity build-up. The compensating balance or total CBU should not exceed the total loan portfolio;

(e) Is prohibited from directly engaging in the insurance business. However, a Microfinance NGO may establish partnerships with authorized microinsurance agents and/or entities in the furtherance of its social protection objectives;

(f) Charges reasonable interest and collects such necessary fees and charges incidental to its microfinance operations;

(g) Borrows money or incurs such obligations for the purpose of relending to microfinance borrowers, subject to existing laws: Provided, That a Microfinance NGO shall not be deemed as engaged in quasi-banking activities if the proceeds of such borrowings are exclusively used for relending to microfinance borrowers;

(h) Accepts donations or grants or contributions in accordance with existing laws and regulations;

(i) Invests its funds in sound, nonspeculative enterprises and instruments, subject to rules and regulations of the relevant government regulatory agency;

(j) Maintains a transparent and comprehensive management information system; and

(k) Publishes and discloses audited accounts at the end of every financial year.

Nothing in this section shall be construed as precluding a Microfinance NGO from performing such services or exercising such powers as may be granted by law or as may be necessary or incidental to its activities as a nonstock, nonprofit NGO.