MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) and the Japan International Cooperation Agency (JICA) are teaming up to build a credit risk database (CRD) that would help micro, small and medium enterprises (MSMEs) improve access to financing.
“During the lockdowns implemented to curb the spread of COVID-19, most MSMEs closed totally and some operated on a highly limited basis. The harsh reality is that the pandemic added to the existing challenges encountered by MSMEs and therefore undermines progress towards inclusive economic growth,” BSP Governor Benjamin Diokno said.
The project promotes risk-based lending and lessening the dependence of banks on collaterals during credit evaluation.
This will be achieved through the use of statistical credit scoring models to be developed on the CRD that can predict the probability of an MSME default.
The augmented access to credit is expected to result in enhanced productivity and competitiveness of MSMEs, which make up 99.5 percent of businesses in the country.
“The CRD project is a tangible step in building a sustainable financing ecosystem for MSMEs, the backbone of our economy and the driver of the country’s inclusive economic growth,” Diokno said.
The lack of access to credit remains a fundamental obstacle to the further development and sustainability of MSMEs due to their reluctance to apply for bank loans, citing lack of credit history and acceptable collateral and banks’ perception that MSMEs in general are high-risk clients.
The virtual launch was participated by representatives from JICA, Chamber of Thrift Banks, Bankers Association of the Philippines and Rural Bankers Association of the Philippines, as well as representatives from 17 pioneer banks.