BSP partners with CDA for sustainable MSME

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has partnered with cooperatives to ensure access to financing by micro, small, and medium enterprises (MSMEs) as the country continues to struggle to contain the COVID-19 outbreak.

BSP Governor Benjamin Diokno said the central bank’s partnership with the Cooperative Development Authority (CDA) reflects its commitment to support the development of the credit surety fund (CSF) as a vital credit infrastructure for sustainable MSME financing.

The BSP and the CDA signed a memorandum of agreement (MOA) last month formalizing their cooperation arrangements for the effective implementation of Republic Act 10744 or the Credit Surety Fund Cooperative Act of 2015.

“Our partnership with the CDA aims to harness collaborative efforts toward our shared goal of empowering cooperatives and MSMEs through the CSF,” Diokno said.

The CSF is a credit enhancement mechanism designed to address the challenges of MSMEs and their cooperatives in accessing bank financing due to lack of collateral and credit history.

Managed and administered by a CSF cooperative, the fund is generated primarily from the contributions of well-capitalized cooperatives and local government units (LGU), as well as government financial institutions such as the Development Bank of the Philippines, Land Bank of the Philippines and the Philippine Guarantee Corp.

It serves as a security in lieu of hard collateral for loans extended to qualified cooperative and MSME borrowers.

By providing cooperatives and MSMEs with greater financing opportunities, the CSF is envisioned to support the MSMEs become more valuable contributors to economic development and job generation in their local communities.