MNRC revises microfinance NGO accreditation guidelines

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THE Microfinance NGO Regulatory Council (MNRC) is looking to revise its guidelines for the accreditation of microfinance nongovernment organizations (MF-NGO) for 2022 to 2025.

“In view of the impending expiration of [MNRC] Certificates of Accreditation issued in March 2019, the council has been hard at work in revising the MNRC accreditation requirements of microfinance NGOs, along with parameters to assess the applicants’ financial performance, social performance and good governance,” the MNRC said.

The draft circular streamlines requirements and guidelines set under MNRC Memorandum Circulars (MC) numbers 1, Series of 2018, and 1, 2, and 4 Series of 2018.

The MNRC is calling on all MF-NGOs, their clients, and other stakeholders to comment, suggest revisions, and state the estimated cost implications for the MF-NGO on the proposed guidelines for accreditation, which cover the 2022 to 2025 period.

Under the draft, MF-NGOs are now required to maintain a minimum fund balance of P1 million “at all times.”

To be accredited, entities must have product manuals, program objectives to “reach the poor,” at least 2,500 active microfinance clients, two full-time account officers for microfinance operations, and its total microfinance loans should be at least 65% of its assets.

Upon dissolution of the MF-NGO, its net assets must be distributed to an NGO with the same purpose or the state for public purposes, or whatever may be determined by a court.

The MNRC said that these entities’ articles of incorporation must also state that “no part of the property or income shall inure to the benefit of any member, officer, organizer, or any individual person,” and trustees will also not receive compensation or remuneration. Administrative expenses should also not go beyond 30% of total expenses for the taxable year.

MF-NGOs are required to submit their sworn application, certificate of registration from the Bureau of Internal Revenue, Certificate of No Derogatory Information issued by the Securities and Exchange Commission in the last six months, accomplished MNRC Performance Standards Report Card, latest audited financial statements, among others, via the MNRC’s Google Form.

Meanwhile, requirements for “spin-off microfinance NGOs” or newly-registered MF-NGOs stemming from old entities, will still be based on the MNRC MC No. 2, Series of 2017.

Spin-off microfinance NGOs will need to submit audited financial statements and microfinance operations reports covering the last three years of the old entity, and proof that both the spin-off and the old entity have the same officers or trustees, among others.

“MNRC shall conduct an assessment of the operations of accredited MF-NGOs once every three years, before renewal of accreditation or re-accreditation, using the MNRC Performance Standards covering microfinance operations of the preceding and current year (if applicable),” the MNRC said.

Accredited MF-NGOs may be placed under probation, suspension, or face the revocation of their accreditation if these fail to meet the requirements stated in the new circular.

As the MNRC Certificates of Accreditation issued on or before March 2019 are expected to expire soon, the council is directing those reapplying for accreditation to submit applications before end-January 2022. — K.C.G. Valmonte