The world’s leading microfinance rating agencies have started to make their presence felt in the Philippines for two reasons. They see the Philippines and its robust microfinance sector
as a good market for ratings, and Manila as an ideal site for a regional hub for their operations in Southeast Asia.

This is what Tomas Gomez IV, Rural Bankers Association of the Philippines (RBAP) spokesperson, shared during a recent informal press conference in Manila.

According to Gomez, in the last 12 months alone, three of the world’s leading rating agencies for microfinance institutions (MFIs) consisting of rural banks and microfinance non-government organizations (NGOs) have set up office in the country. These include Planet Rating for their Asia regional office, MicroFinanza for their Philippine representative office, and Micra Phils. (sister organization of the Micra Indonesia).

The three multinational ratings agencies have been engaged by a number of rural banks and MFIs from the NGO community in the past year alone. All three ratings agencies expect more MFIs to submit themselves to voluntary ratings assessments as the RBAP promotes a culture of independent ratings for its member banks.

With rating agencies charging from a low of P300,000 to a high of P800,000, Gomez said RBAP is currently working with funding agencies from Europe to subsidize the rating of rural banks.

Gomez said, “We would like to encourage as many rural banks as possible to undergo rating as this prepares them to access funds, particularly foreign funds. But for RBs whose medium-term funding requirements have been met, independent ratings are an excellent governance tool for RB Boards of Directors to assess the bank's competitiveness and competencies based on global best practices and results.”

Large microfinance investment funds abroad, such as Blue Orchard, Oiko Credit, the Grameen Foundation, Unitus Capital and Intellecap have indicated interest in investing in the country, either through debt financing or quasi equity financing, said Gomez.

“More importantly,” added Gomez, “the ratings output shall serve as an excellent management audit, evaluating a firm’s sustainability, efficiency, and its corporate governance principles. This, in turn, shall enable MFIs to benchmark against best practices of both local and international counterparts,
thereby elevating the global competitiveness of MFIs or rural banks in the Philippines.”t