Smart, LANDBANK present mobile loan saver facility to Davaoeños
Published September 22, 2014
In photo during the Davao launch are, from left, Jocelyn Cabreza, EVP/Branch Banking Sector Head, LANDBANK;
Victor Gerardo Bulatao, director, LANDBANK; Gilda Pico, president and CEO, LANDBANK;
Davao City Councilor Danilo Dayanghirang; and Lito Villanueva, head of Payments Innovation, Digital Ecosystems, and Global Engagements at SMI.
For Mayor Franco Calida of Hagonoy, Davao del Sur, the LANDBANK Mobile Loan Saver (LMLS) will go a long way in helping employees of the municipal government break free from the clutches of usurers that provide last-resort financing.
“This is a loan program that we want to have because this eliminates the need for loan sharks,” said Calida at the sidelines of the recent launch of the LMLS, the country’s first mobile-based savings, loan, and insurance product that was developed jointly by the Land Bank of the Philippines, and Smart e-Money Inc., (SMI), the digital financial solutions provider arm of wireless leader Smart Communications, Inc. (Smart).
Calida added that usurers, colloquially called “5-6” for imposing a 20-percent interest rate on loans on a daily basis, are the ones that employees with minimal pay turn to for emergency loans but high interest costs make it nearly impossible for these loans to be paid back.
“Now that the LMLS is going to be implemented, I will make sure that this is accessible to our employees,” said Calida.
Lito Villanueva, vice president and head of innovation, digital ecosystem build, and global engagements at SMI, said the product is especially useful in times of emergencies when borrowers need access to cash fast.
“The good thing is that the borrower can secure a loan from the bank by merely sending a text message at any time of the day,” said Villanueva, adding the LMLS significantly reduces the time element in processing the loan as well as the resources needed in securing the loan.
The LMLS, he said, is also the answer to the clamor for cheaper loans.
“One thing with the LMLS, it offers the lowest interest rate at 0.83 percent a month, or about 10 percent effective interest rate annually,” Villanueva added. The loan is payable in three years.
The facility was designed to provide borrowers with a loan that can be approved as fast as an SMS and loan proceeds credited to the borrower’s ATM cash card within three banking days.
Since its launch a month ago, LMLS has already attracted over 260 government agencies representing 120,000 employees. The number excludes more than the 16 agencies in Mindanao that signed up during the Davao leg.
Gilda Pico, LANDBANK president and CEO, said offering the LMLS to government employees is just the first phase of the rollout. The same facility will be also made available to workers from private companies next month even without an existing payroll with LANDBANK.
For the first phase, only employees of government agencies whose payroll systems are being handled by LANDBANK are qualified to avail of the loan. An agency must submit a “white list” to the bank containing the names of employees that are eligible to avail of the loan.
An employee that is included in the list can borrow eight times his monthly gross salary or a maximum loanable amount of P1 million. Any employee from a qualified agency is eligible for the loan for as long as his take-home pay would not fall below P3,000 after taking out the loan.
LMLS also has auto savings feature that help build the culture of savings in each borrower. Its insurance feature also provides insurance cover to the borrower while his loan is still being amortized.
“We encourage government agencies, as well as other companies, to look into this product because this will be a big help to their employees,” Pico said.
SMI has been instituting mobile money innovations that are financially inclusive, helping provide financial services to the unbanked and un-carded segments of the society.