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MABS has opted to focus its efforts on Rural Banks because several factors make Rural Banks an almost ideal vehicle for reaching the microenterprise sector. These factors are:
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• Rural Banks offer excellent geographic coverage. At present there are an estimated 1800 Rural Bank branches located throughout the Philippines, covering over 85% of all municipalities in the Philippines.
• Rural Banks are culturally and geographically close to the target market. Most Rural Bankers have personal familiarity with scores of microenterprises in their areas, and regularly use services offered by microenterprises.
• Rural Banks tend to be small, locally owned enterprises. Their size and structure usually allows for loan decisions (and other decisions) to be made quickly. There is usually no need to refer decisions to a headquarters bank in a provincial capital or in Manila.
• Rural Banks’ overhead costs are usually much lower than are the overhead costs of other types of banks. This makes it more likely that they will be able to make a profit even as they carry out the large number of transactions that are associated with a microenterprise portfolio.
• Many Rural Banks are being “squeezed” as commercial banks enter markets that formerly were exclusively theirs. As such, many are very interested in exploring potential new markets - like the microenterprise market.
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