Central bank launches CSF in Mandaue

CEBU, Philippines - The Bangko Sentral ng Pilipinas has launched a Credit Surety Fund (CSF) in Mandaue City, the 48th established across the country.

At the launching Tuesday, BSP Deputy Governor Diwa Guinigundo signed a memorandum of agreement with City Mayor Luis Quisumbing at Big Hotel in Mandaue City.

The CSF in Mandaue City is the 9th established in the Visayas region.

The central bank also recently launched a CSF in Tacloban City.

The Bangko Sentral said the CSF is expected to spur business growth, stimulate economic activities and provide job opportunities.

Started by BSP in August 2008, the CSF is a credit enhancement program for the micro, small and medium enterprises (MSMEs) that cannot access bank credit due to lack of hard collaterals and credit history.

The CSF is created through the pooling of monetary contributions from cooperatives, non-government organizations, local government units and partner institutions.

The fund serves as an alternative security in lieu of the hard collaterals required by banks, thereby helping capital-short MSMEs with viable business plans gain access to bank loans.

Under the scheme, the MSMEs pool their money into one collective fund which will then be accepted by banks as collateral. A firm can borrow a loan worth as much as 10 times the amount which they poured into the surety fund, with a minimum placement of P100,000.

According to BSP, at least 15 cooperatives have joined the Mandaue City CSF.

In support, the city government has added its counterpart contribution to the fund.

Partner institutions such as the Development Bank of the Philippines, Land Bank of the Philippines and the Industrial Guarantee and Loan Fund will also provide their respective contributions to the Mandaue City CSF.

As of end April 2017, a total of P3.25 billion in bank loans have been released to 16,360 beneficiaries nationwide.

Last February 6, 2016, the CSF has been institutionalized through the enactment of Republic Act No. 10744, otherwise known as the “Credit Surety Fund Cooperative Act of 2015”.

Now on its 9th year, the CSF already has presence in 31 provinces and 17 cities nationwide.

The BSP earlier signed the implementing rules and regulations for RA 10744 which would streamline the process of setting up the credit facilities for MSMEs across the country.

The new rules, signed by BSP and Cooperative Development Authority, effectively make the CSF program permanent and provides a legal personality for the cooperatives in signing deals with banks and its partners.

The CSF program also provides a new avenue for micro-firms to secure loans, on top of the 10 percent credit quota imposed on universal and commercial banks provided under the Magna Carta for MSMEs.

Based on the May 2016 Investment Policy Review of the Organization for Economic Cooperation and Development, MSMEs account for 99 percent of Philippine firms and 60 percent of employment, but contribute only 36 percent of gross value added.