MSME loans hit P5.5 billion

MANILA, Philippines — Total loans approved by banks to micro, small and medium enterprises (MSMEs) under a credit enhancement scheme reached P5.5 billion, according to the Bangko Sentral ng Pilipinas.

The BSP said the total accumulated loans released by banks under the Credit Surety Fund (CSF) program reached P5.19 billion and benefited 17,404 as of end-September 2018 since it was launched in 2008.

A total of P878.7 million was released from lender banks with 235 beneficiaries under the CSF program from January to September 2018.

Outstanding loan balance as of end- September was about P1.25 billion of which P1.02 billion was covered by the CSF.

Three CSFs were established in 2018, bringing the total to 54 CSFs established with 791 members in 33 provinces and 21 cities nationwide since 2008.

Data from the Philippine Statistics Authority (PSA) showed 99.5 percent of the establishments in the Philippines are MSMEs.

One of the roadblocks for their continued growth is access to financing, prompting MSMEs to succumb to loan sharks or the “5-6” lenders who charge exorbitant interest rates.

The BSP initiated the CSF program in August 2008 as a credit innovation designed to improve that cannot access bank credit due to lack of acceptable collaterals and credit information.

The CSF, through the issuance of a surety agreement, allows cooperatives and businessmen with viable business plans but limited capital to obtain loans from banks even in the absence of hard collaterals.

The CSF provides up to 80 percent surety cover for loans granted by banks to borrowers that would otherwise have difficulty assessing such credit facilities due to insufficient collateral, limited credit histories, and inadequate financial records, among other barriers.

The CSFs are now under the regulation of the Cooperative Development Authority (CDA) with the passage of Republic Act 10744 or the Credit Surety Fund Cooperative Act of 2015.

As mandated in the CSF Act, the BSP would continue to promote and organize CSFs nationwide and provide technical assistance such as trainings and seminars in coordination with other public or private stakeholders.

In 2018, the coordination efforts between BSP and CDA commenced to implement the provisions of the said law.

The central bank intensified efforts to strengthen the foundations that are needed to achieve the envisioned scale, depth, and breadth of financial access.

Key initiatives were geared toward the development of critical financial infrastructure, deepening financial literacy and promoting responsive products for the underserved markets.

As with any high-impact objectives, strategic partnerships and collaborative efforts with various stakeholders played a key role in the success of these initiatives.

The National Strategy for Financial Inclusion (NSFI), shepherded by the interagency Financial Inclusion Steering Committee (FISC) chaired by the BSP, continues to serve as the primary platform for multi stakeholder coordination and collaboration.