amando m tetangco, jr : sustaining the momentum for inclusive growth speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( bsp, the central bank of the philippines ), at the chamber of thrift banks convention, makati city, 18 march 2016. * * * in preparing for my remarks, i considered your theme and two words leapt at me. the first word is “ momentum ”. as you may know, this takes its roots from physics. some may remember its formula - - “ mass x velocity ”. in other words, “ mass in motion ”. the second really, is a phrase - - “ inclusive growth ”. picture this then, an object, say, a truck called “ the initiatives and programs towards inclusive growth ”, that is on the move and it will take some effort to stop it. that is what this conference is all about. first - - how can we ensure a critical mass of initiatives to keep us moving towards the goal of inclusive growth. and then, how can we make sure that we will continue in motion. our current operating environment in gathering my thoughts for today ’ s event, i could not help but reflect on how the last seven months or so have affected our operating environment. global growth has slowed. developments out of china have surprised markets. the us federal reserve finally raised its target funds rate ( although just yesterday the fed turned dovish, retreating on their initially indicated four rate hikes in 2016 to just two ). risk aversion was causing a de - risking. and oil supply was significantly much larger than demand. the net result has been a volatile financial market. and while it felt good to see a full tank ’ s worth of fuel cost significantly less, we remain cognizant of what this was doing to our countrymen working in oil - generating economies. without overlooking these emerging developments, we should also not lose sight of the fact that our macroeconomic and financial market fundamentals remain solid and intact. we have now had 68 quarters of continuous growth, finishing 2015 at a full - year growth of 5. 8 percent. inflation was recorded at 1. 4 %, the lowest rate since the bsp adopted inflation targeting as our monetary policy framework in 2002. our balance of payments position for 2015 was at a surplus of usd2. 6 billion, a turnaround from the usd2. 9 billion deficit in 2014. and with our gross international

##2 ) leading to social, economic and financial empowerment of the poor, especially the women. a comprehensive regulatory framework for nbfc - mfis was first introduced by the reserve bank in december 2011 wherein eligibility criterion for microfinance loans linked to core features of microfinance was prescribed i. e., small collateral free loans to borrowers belonging to low - income groups. besides, the regulations laid special emphasis on protection of borrowers and adoption of fair practices in lending such as transparency in charges, ceilings on margins and interest rates, no prepayment penalty, flexible repayment schedules, non - coercive methods of recovery, and measures to contain multiple lending and over - indebtedness. introduction of a comprehensive regulatory framework for nbfc - mfis with a mandate of providing credit to low - income households meant that fundamental structure for provision of credit to the excluded section was in place. but this addressed only part of the problem. on one hand, we had commercial banks which were providing savings products to the poor but were a bit wary in providing small - ticket loans. on the other hand, there were nbfc - mfis which were providing small - ticket loans but could not offer savings related services. to overcome this, a differentiated category of banks viz., small finance banks ( sfbs ) was introduced which could offer deposit facilities and have a mandate of providing a certain percentage of their loans as small ticket loans. in essence, sfbs could meet the entire financial needs of a low - income household under one umbrella. over last decade, the landscape of the microfinance sector has undergone a significant change from being an mfi dominated proposition to becoming a bastion of banks ( including sfbs ). this has been primarily driven by conversion3 of some large nbfc - 2 / 7 bis - central bankers'speeches mfis to banks and consolidation in the microfinance sector. consequently, the share of standalone mfis i. e., nbfc - mfis in the overall microfinance sector loan portfolio has come down significantly over last few years. this had led to a situation where the specific customer protection measures designed to protect the interests of vulnerable microfinance borrowers were not being adopted by a larger number of lenders thus negating the primary objective of the regulations. against this backdrop, reserve bank came out with a comprehensive and revised regulatory framework for microfinance loans in march 2022. our intent in