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Davao City, Philippines

Financial literacy vs investment scams

September 24, 2019 - Tuesday 11:09 AM by Lovely Carillo

Article Banner Image FINANCIAL LITERACY. BDO Network Bank Jesus Antonio Itchon (middle) explains how the bank is committed to promote financial literacy among Filipinos. Senior Vice President Karen Cua (left) bares that MSMEs can get loans of up to P500,000 without collateral and without much documentary requirement. LOVELY CARILLO

Mang Gerry, a taxi driver in his 40’s, was looking forward to getting his payout of almost P100,000 from Rigen Investment. This was supposed to be the second payout for him. 

“The first time I invested P10,000 and got threefolds; I used a portion for my children’s education and the remaining money I reinvested,” Mang Gerry said. He saved that money for the education of his children and admitted that investing it was a huge gamble. 

While he was able to get back the original money he invested with some profit, he can only hope to still get his payout  now that the government has officially ordered the closure and cessation of the various investment schemes including Rigen.

Rigen, which operates in Davao Oriental, Davao Occidental, Davao del Sur, General Santos City, and other neighboring cities and municipalities, is a startup based in Tagum City. It has enticed people from all walks of life thanks to its promise of a guaranteed 400 percent return in a month.

Even before President Rodrigo Duterte ordered the closure of various investment schemes that were considered scams, the Davao City Anti-Scam Unit (ASU) had already issued a cease and desist order against Rigen Marketing for its failure to secure a business permit to operate in the city.

Mang Gerry’s case is, however, just a microcosm of an aspiration common among majority of the Filipinos. This is the hope of having enough resources for food, house and education—basically the basic needs of every human being. This need could be the reason why so many Filipino are vulnerable to these unscrupulous investment scheme. Or it could be their lack of financial literacy.

Surprisingly, most of those victimized by these so-called investments scams come from the supposedly educated sector of society including the teachers and even uniformed personnel. But then again, these investment scams have become a great leveller—-because no one is exempted from being duped.

Financial Literacy
Financial literacy cannot be achieved in one sitting. The people behind BDO Network Bank knows this and has established a financial literacy program to promote literacy among Filipinos. The strategy is to focus on the civil service particularly the education sector, knowing that the sector influences millions of students who will soon become parents, leaders and decision makers.

“The Intention is to cover all government agencies considering that it has 1.7 million employees, which could mean a lot when it comes to the multiplier effect especially in the countryside,” BDO Network Bank Jesus Antonio Itchon said in a press conference held in the city Friday.

Itchon said teachers need to be educated first before they can teach their students about financial literacy. In most communities, he said, the teachers are among the highest paid so they usually have extended households.

“This is why we need to help the teachers first so they can educate their students and also to help everyone rise above poverty,” he said. It is part of BDO Network Bank’s mission to help the Micro Small and Medium Enterprises (MSMEs) since they are the cornerstone of the economy and so we need to help them build their capital, he added.

One of the dilemmas faced by the banking sector is the reality that only 30 percent deals with the banking system and 70 percent outside the system.

“It is important that we have to include them and to reach out to them so we are aggressively building our network,” he said. BDO Network Bank, which used to be One Network Bank, now has 150 branches nationwide, 102 of which are in Mindanao. It also has 90 loans offices nationwide.

 

GETTING BY. One of the public school teachers who benefited from the salary loan offered by BDO NEtwork Bank. LOVELY CARILLO

Serving the unbanked
Itchon assured everyone of the bank’s commitment to continue making its presence felt in Mindanao and to live up to ONB’s thrust of being a bank from Mindanao. He said ONB is a very strong brand in Mindanao especially in Davao.

“Our goal is to serve the unbanked and the unserved communities,” he said. This mission is best embodied in its programs—Kabuhayan Loan for MSMEs and the Salary Loan for public school teachers.

Through the Kabuhayan Loan for MSMEs, the bank provides the sector access to working capital to help the MSMEs grow their business and accumulate capital.

“To be able to promote financial literacy we have to build a margin, when our ability to take risks become better then we can go to more areas in Mindanao,” he said. Without capital backing from its parent bank BDO, he admitted that they will not be able to go into unsecured lending for up to P500,000.

BDO Network Bank Senior Vice President Karen Cua said the difference between BDO and other lending institutions is that their borrowers have to first open a savings account with them and for some, this is the first time to get their hands on an ATM card.

“We lend from P30,000 to P500,000 depending on the status of their business,” she said. The loan is covered by an auto debit arrangement at a monthly rate of 3.5 percent.

Cua said unlike other loans that the MSMEs have to pay on a daily or weekly basis, the BDO loans require monthly payment so they are able to reuse the money as capital.

Aside from not requiring collateral to secure the loan, BDO Network Bank only requires the very basic including valid government ID, business permit and proof of residence. It is also the bank officers who go to the areas where the MSMEs conduct their business.

“We help them grow their business, take them from the informal sector, and help them accumulate capital and build for the future,” she said.

“Part of our financial information seminars among students is to teach them how to handle finances at a young age; we created lesson plans for teachers so they can cascade it to their students,” BDO Network Bank Senior Vice President Alberto Quiogue said.

Itchon said BDO Network Bank is not afraid to go to areas where other banks fear to tread. This is evident with the banks presence in far away aras like Kalamansig and Lebak, and its plan to even expand in the Bangsamoro area.

In its commitment to provide financial literacy to majority of the Filipinos, Itchon said what is important is not why 70 percent of Filipinos is not banking “but why the banks have not learned to serve that 70 percent.”
 

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