Social Reform and Poverty Alleviation Act

Section 13

The programs and implementing mechanisms of the Social Reform Agenda's Flagship Program on Credit shall be integrated, adopted and further enhanced to effectively support the objectives of this Act along the following thrusts: (1) Development of a policy environment, especially in the area of savings generation, supportive of basic sector initiatives dedicated to serving the needs of the poor in terms of microfinance services; (2) Rationalization of existing government programs for credit and guarantee; (3) Utilization of existing government financial entities for the provision of microfinance products and services for the poor; and (4) Promotion of mechanisms necessary for the implementation of microfinance services, including indigenous microfinance practices.

Section 14

The People's Credit and Finance Corporation (PCFC), a government- controlled corporation registered with the Securities and Exchange Commission and created in accordance with Administrative Order No. 148 and Memorandum Order No. 261, shall be the vehicle for the delivery of microfinance services for the exclusive use of the poor. As a government-owned and -controlled corporation, it shall be the lead government entity specifically tasked to mobilize financial resources from both local and international funding sources for microfinance services for the exclusive use of the poor.

Section 15

To facilitate the increase in the capitalization of the PCFC, the President of the Republic of the Philippines shall take measures to enable the amendment of the Articles of Incorporation of the PCFC such that: (a) The authorized capital stock of the PCFC may be increased from One hundred million pesos (P100,000,000.00) to Two billion pesos (P2,000,000,000.00) divided into twenty million common shares with a par value of One hundred pesos (P100.00) per share; (b) The subscribed capital stock may be increased from One hundred million pesos (P100,000,000.00) to Six hundred million pesos (P600,000,000.00) and the national government may subscribe the difference of Five hundred million pesos (P500,000,000.00); (c) The initial paid-up capital may be increased from One hundred million pesos (P100,000,000.00) to Two hundred fifty million pesos (P250,000,000.00), to be increased subsequently to a total of Six hundred million pesos (P600,000,000.00), such that at the end of a period of four (4) years the subscribed capital shall be fully paid-up, in the following manner: For the initial increase in paid-up capital during the first year, the difference of One hundred fifty million pesos (P150,000,000.00) shall be paid and appropriated for by government; for the second year, One hundred fifty million pesos (P150,000,000.00); for the third year, One hundred million pesos (P100,000,000.00); and for the fourth year, One hundred million pesos (P100,000,000.00). The appropriations for the additional paid-up capital shall be sourced from the share of the national government in the earnings of the PAGCOR, in the manner provided for under Sec. 18, which provides for the appropriations under this Act.

Section 16

The existing government financial institutions shall provide for the savings and credit needs of the poor. The GFIs such as the Land Bank of the Philippines, Philippine Postal Bank, Al Amanah Bank, and the Development Bank of the Philippines are hereby mandated to coordinate with NAPC and PCFC in setting up special credit windows and other arrangements, such as the servicing of Small Savers Instruments (SSIs), that will promote the microfinance program of this Act. The private financing institutions may also provide the savings and credit requirements of the poor by setting up similar credit windows and other arrangements to promote the savings component of the microfinance program of this Act. Special credit windows for the poor shall, as far as practicable, include an allocation for the basic sectors, as defined in this Act, particularly those living in the rural areas, agrarian reform communities, and women in the countryside.

Section 17

In the event that the ownership of the majority of the issued voting stocks of PCFC shall have passed to private investors (exclusively qualified nongovernment organizations, people's organizations and cooperatives), the stockholders shall cause the registration with the Securities and Exchange Commission (SEC) of the revised Articles of Incorporation and By-laws. The PCFC shall thereafter be considered as a privately organized entity subject to the laws and regulations generally applied to private corporations. The chairman of the PCFC may still be a member of the National Anti-Poverty Commission (NAPC) upon the privatization of the PCFC: Provided, That the PCFC will continue its main purpose of providing for the savings and credit needs of the poor.