MSME loans hit P527 billion in end-August
In a webinar series organized by the UP Alpha Phi Beta, BSP Governor Benjamin Diokno said banks have granted new loans and re-financed the existing loans of MSMEs as the economy stalled after Luzon was placed under lockdown to curb the spread of the virus.
STAR/Geremy Pintolo, file
MSME loans hit P527 billion in end-August
Lawrence Agcaoili (The Philippine Star) - October 21, 2020 - 12:00am

MANILA, Philippines — Loans provided by banks to micro, small and medium enterprises (MSMEs) severely affected by the COVID-19 pandemic amounted to P527.2 billion as of end-August, according to the Bangko Sentral ng Pilipinas (BSP).

In a webinar series organized by the UP Alpha Phi Beta, BSP Governor Benjamin Diokno said banks have granted new loans and re-financed the existing loans of MSMEs as the economy stalled after Luzon was placed under lockdown to curb the spread of the virus.

“The banking system has responded positively to these relief measures as we can see from banks’ lending behavior and activities towards the sector,” the BSP chief added.

Diokno said MSMEs account for about 99 percent of total establishments in the country, 63 percent of total employment, and 36 percent of total value added.

Likewise, he said the sector is also a major contributor to the country’s current account, generating one-fourth of total export earnings.

He explained the lending rates for MSMEs have also generally declined as the Monetary Board slashed interest rates by a cumulative 175 basis points so far this year.

Aside from cutting interest rates, Diokno said the BSP has also lowered the reserve requirement ratios for big banks by 200 basis points and for mid-sized, as well as small banks by 100 basis points.

The BSP also expanded the set of eligible instruments as compliance with the BSP’s reserve requirements to include newly granted loans to MSMEs and critically impacted large enterprises that do not belong to conglomerates.

According to the BSP, it also issued time-bound and targeted regulatory and operational relief measures to encourage BSP-supervised financial institutions to continue their support to the economy, particularly the MSME sector.

“These measures include extension of financial relief to borrowers, incentivized lending, promotion of continued access to financial services, support for continued financial services delivery, and support for sufficient level of domestic liquidity and economic activity,” Diokno said.

BSP Deputy Governor Francisco Dakila Jr. said in a separate forum the central bank is still prepared to use the full range of its monetary instruments and to deploy monetary and regulatory relief measures as needed in the fulfillment of its price and financial stability objectives.

“While the economy gradually recovers from the worst part of the crisis, uncertainties surrounding the evolution of the COVID-19 pandemic remains,” Dakila said.

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