MANILA, Philippines — Loans extended by banks to micro, small, and medium enterprises (MSMEs), which are used as compliance to the reserve requirement ratio (RRR), reached P183.9 billion as of mid-June, according to the Bangko Sentral ng Pilipinas.
BSP Governor Benjamin Diokno said the amount accounted for 12.6 percent of the total required RRR as of June 17, a substantial increase from the P8.7 billion in MSME loans or 0.6 percent recorded in April last year.
“Due to the vital role of MSMEs in the Philippine economy, the BSP has deployed a wide range of policies, regulatory and relief measures to support them,” Diokno said.
The figure is still within the caps imposed by the BSP on the amount of loans which banks can use as alternative compliance to RRR. The cap was set at P425 billion for large companies.
Aside from the innovative measure to allow loans to MSMEs as alternative compliance to the RRR, the BSP has also temporarily reduced the risk weights of loans granted to MSMEs.
Additionally, the regulator also deferred the implementation of the revised risk-based capital framework for banks to end-2022 as well as the reporting of past due and non-performing loans (NPLs) of borrowers affected by the COVID-19 to end-2021 instead of the original timeline of March 8, 2021.
According to the BSP, the policy issuances reinforce the central bank’s earlier pronouncements that relax the know-your-customer requirements for retail clients to facilitate their access to formal financing channels.
The regulator continues to support MSMEs through the promotion of innovative financing mechanisms, improved digital and financial infrastructure as well as by bridging the information and data gap through more evidenced-based policymaking.
Union Bank of the Philippines president and chief executive officer Edwin Bautista said the banking sector should continue to find new ways to ensure that MSMEs are able to borrow for their business needs more easily especially amid the COVID-19 pandemic.
“The problem is not the MSMEs. They know this (e-commerce) is the way to go. I think the problem is more of the banks. As banks, I think it’s about time that we recognize that it is us which need to do most of the pivoting rather than the MSMEs,” Bautista said.