Report on Best Practices for Sustainable Models of Pro-Poor Rural Finance Services in Philippines

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The objective of this report is “to enable rural finance providers and governments extend financial services on a sustainable basis, through the application of best practices suitable to their unique operating environments”1. A documentation of best practices of sustainable, pro-poor rural financial services provides the information and data for policy formulation on how those best practices could enhance the delivery of financial services to small clients, especially poor households.

Based on a set of criteria, the best practices documented in this report have the following characteristics: First, it is pro-poor, that is, accessible and favorable to the poor; Second, it is technically and financially feasible which are factors that can make replication feasible and; Third, it is cost-effective, profitable and sustainable. In other words it is viable and doable over a continuous period without the assistance of a subsidy in any forms. Sustainability of the rural financial service is a necessary but not sufficient
condition for providing the poor with access to financial services such as credit, savings and other financial services. Those sustainable rural financial services should be pro-poor as well because a financial service could be sustainable but it does not serve the poor because it is not accessible and does not provide favorable terms to the poor. For instance, credit at relatively low and competitive rates. Governments in the region have realized the limited impact of efforts to mobilize substantial funds to
support the rural population when those funds are not accessible nor provided at reasonable and favorable terms to the poor.

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