Digibank exec cites importance of providing credit to micro biz

By Joann Villanueva

June 28, 2023, 7:32 pm

<p><em>PNA file photo</em></p>

PNA file photo

MANILA – An executive of a digital bank has underscored the need to provide financial access to micro businesses for them to thrive.
UNO Digital Bank and 1Sari Financing Corporation have partnered to provide credit to neighborhood convenience stores, known in the Philippines as sari-sari stores, which number to around 1.3 million across the country.
Manish Bhai, UNO Digital Bank chief executive officer and founder, in a reply to emailed questions from the Philippine News Agency on Wednesday, said “lending to micro-retailers is an uncharted territory but we feel this is a hugely underserved segment that deserves access to formal credit.”
He said these convenience stores “operate on a very cash-dependent day to day basis.”
Thus “if they fall short of cash, they will not be able to replenish inventory, leading to lower sales”, he said.
Bhai said this situation “is an endless cycle that if not properly managed can lead to the closure of the business.”
“Since SMEs (small and medium enterprises) contribute significantly to our local economy, suppressing credit access to this segment will have an impact not only on the barangay (village) level but also the national level,” he added.
Under the team-up with 1Sari Financing Corporation, Uno Digital Bank intends to provide lending to sari-sari store owners in a bid to lessen the latter’s reliance on informal fund sources.
Bhai said only around 11 percent of Filipinos borrow from the formal sector, or the banks and other financial institutions.
“We want to take that number up. We believe credit inclusion is a very important part of financial empowerment,” he said.
He declined to give figures on the target loan disbursements for the year but said they intend to extend loans to areas where 1Sari Financing Corporation currently has operations and these are in Laguna, Batangas and Cavite.
Bhai said that while they know the risks of lending to micro businesses, “this is the reason we hope to learn more about this underserved market and there's no way of doing this but to get our feet wet.”
“At the end of the day, we always have our credit policies, which ensures that we have sound and prudent credit risk management in place,” he added. (PNA)