provide financing needs in the areas of agriculture and housing, among others. in the philippines, practitioners have developed the micro - agri product and more recently the breakthrough housing microfinance product which the bangko sentral recognizes as variations of a microfinance loan. indeed, we continue to innovate because the financing needs of microfinance clients go beyond simple business loans. with more appropriately designed loan products, microfinance institutions are now able to respond to the varied needs of their clients, diversify their portfolios, and reduce the risk of business loans applied to agriculture or housing. parallel to the development of products offered by microfinance institutions, significant changes are also taking place in their delivery channels. microfinance institutions are increasingly recognizing how information and communication technology can provide revolutionary channels to better serve existing clients or an opportunity to reach new ones. these new channels – such as mobile phones, automated teller machines ( atms ) and point of sale ( pos ) card readers – have also brought with them significant improvements in efficiency and convenience, while lowering costs for both the microfinance institutions and their clients. in the philippines, for instance, rural banks have tied up with mobile phone companies to facilitate microfinance loan payments, deposits, and withdrawals through a simple sms or text message. in other words, the microfinance landscape in our country continues to evolve … in step with client needs and innovations in technology and the regulatory framework. the challenge before us is to further broaden and deepen the reach of microfinance in the philippines. at the bangko sentral, we accept this challenge and commit to uphold an enabling policy and regulatory environment that will allow microfinance to flourish further. we will continue to monitor the many developments and innovations taking place in the world of microfinance so that we can maximize the benefits we can derive from it. to strengthen our capacity in this regard, we have organized a special unit which we call inclusive finance advocacy, to explore and facilitate the development of new options to improve and increase access to financial services of our people. we have also created a microsme finance specialist group in our supervision and examination sector for banks with significant exposure to micro and sme lending. this group has been trained on riskbased supervision and the peculiarities of lending to the msme sector. i should add that these initiatives of the bangko sentral toward broader financial inclusion will continue to be guided by a high - level microfinance /

if banks are to be responsive to the needs of the public. nevertheless, while having an array of products and services is necessary, this is also not sufficient. the diversity across constituents calls for consumer protection and customer care to be on top of our agenda. this is the responsible path to take. at the bangko sentral, the drive to promote financial inclusion is balanced with programs to institutionalize redress mechanisms and financial education. today, this balanced approach is part of global standards. nevertheless, the bangko sentral is taking consumer protection a notch higher. soon, our supervised institutions will also be examined on how they provide consumer protection. up for consideration by our monetary board is a consumer protection framework that outlines the modes of behavior and practices that should be adhered to by bsp - supervised institutions. responsible market conduct : a credit perspective a central tenet of the financial consumer protection framework is the aspect of responsible market conduct. this, extends beyond consumer protection and is a critical pillar of our market. i am pleased to share therefore that even with the high level of liquidity in the banking system and our own push towards a more inclusive banking industry, our banks, in general, adhere to high standards of credit discipline. for instance, we note that while total loan portfolio increased by over a trillion pesos between december 2009 and march 2013, the amount of non - performing loans over the same period actually declined by over 11 billion pesos. and even with this improvement, banks further increased their allowance for credit losses on loans by more than 11. 6 billion. the result is a declining npl ratio and an npl coverage ratio above 100 percent. likewise, the country ’ s credit - to - gdp ratio does not show any sign of unwarranted expansion. in fact, within asean - 5 we remain at the low end of the spectrum on this measure, suggesting that there is room to grow within the tenets of sound credit standards. in addition, stress tests, which we conduct every semester, tell us that the balance sheet of banks can absorb extreme credit shocks. even at a 50 percent write off, capital positions are sufficient to take on the magnitudes of such losses. ladies and gentlemen, all of these bis central bankers ’ speeches indicators suggest that philippine banks manage their credit exposures quite well. they observe a degree of conservatism needed to stay within the so - called “ discipline of target markets. ” this is evident by the declining levels of npls, high