DAVAO CITY—A micro-financing program for small businesses would set apart the Bangsamoro Region from existing loan practices with its non-collateral and shared risk features.
The microfinancing program is contained in Parliament Bill 164, or the Bangsamoro Microfinancing Act of 2021, which seeks to provide an affordable, accessible, simple, and responsive microfinancing program for the region’s micro enterprises, especially those in the poorest populations.
Member of Parliament Amilbahar Mawallil filed the bill for the micro and small-scale enterprises in the region on Tuesday.
The bill adapted the principles of Islamic financing, he said, such as risk-sharing and equitable distribution of wealth “in the conduct of financing operations consistent with the principles of Shari’ah law.”
He said promoting and developing Islamic financing for micro and small-scale enterprises would help the Bangsamoro government’s efforts to encourage and support the building of entrepreneurial capability in the region.
Under the proposed measure, beneficiaries of the Bangsamoro Microfinancing Program (BMP) are micro, cottage, and small enterprises, as defined under Republic Act No. 6977, or the Magna Carta for Micro, Small, and Medium Enterprises.
The BMP would be available through accredited partner financial institutions, such as rural banks, cooperatives with lending licenses, microfinancing institutions, or lending companies duly licensed by the Bangko Sentral ng Pilipinas, the Cooperative Development Authority, or the Securities and Exchange Commission.
He said the features of the Bangsamoro Microfinance Program are:
The concept of risk-sharing (Mudarabah), wherein the PFI shares in the profit and loss of the enterprise it underwrites;
The avoidance of any ambiguity and deception (Gharar) that may come from contract or agreement relative to financing transactions pursued under this Act;
No interest rate shall be imposed on the loan availed of;
It shall not extend to individuals or enterprises who are engaged in activities, which are considered as haram or forbidden, such as producing or selling alocohol or pork;
There shall be no collateral requirements; and
The loanable amount for individual loans shall be set and regularly reviewed by the Bangsamoro Parliament in an annual report on the status of the BMP.
“The enactment of this bill will help create an environment conducive to the development and growth of vibrant regional enterprises and will act as a catalyst for intensified private sector activity to accelerate and sustain regional economic growth,” Mawallil said.