BSP tells banks to ease credit access to SMEs

MANILA — Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla Jr. yesterday called on banks to ease credit access to small and medium enterprises (SME), a sector deemed crucial to economic growth.

Speaking at the 43rd Philippine Business Conference and Expo in Manila Hotel on Wednesday, Espenilla said the central bank itself is not requiring banks to demand collaterals from SME borrowers.

Instead, the country’s bank regulator is encouraging banks to apply "good judgment and credit analysis" in providing much-needed loans to the SME sector.

"The central bank is adjusting its regulations so banks can reach to this market," Espenilla told delegates from some of the country’s biggest companies.

Data from the BSP showed banks continued to fall short of the mandated lending for microfinance and small and medium enterprises (MSMEs) under RA 6977 as amended by RA 8289 and 9501 or the Magna Carta for SMEs.

Loans extended by banks to MSMEs in the first quarter of 2017 reached P494.88 billion or 8.4 percent of total loan book but still below the mandated threshold of 10 percent.

A 2015 Asian Development Bank report noted that across AsiaPacific, banks remain reluctant to fund SMEs. This is especially true in the Philippines, where SME loans were equivalent to only 3.1 percent of GDP— the second lowest in the ASEAN region, next to Myanmar’s 0.1 percent.

MSMEs account for 99.5 percent of the country’s total establishments and employ about 61.6 percent of the workforce.