Central bank studies Shar’iah compliance of credit surety fund

The Bangko Sentral ng Pilipinas (BSP) is studying on how to make the credit surety fund (CSF) scheme compliant with Islamic laws.

BSP Deputy Governor Diwa Guinigundo said making the CSF Shar’iah compliant would extend the benefits of the loan program to Muslims.

“In this manner, the Islamic community will have access to funds even if facing collateral constraints,” he added.

The BSP developed the CSF as a credit enhancement scheme to improved bankability and credit worthiness of micro, small, and medium enterprises (MSMEs) including cooperatives.

These small borrowers could not obtain financing from banks due to lack of acceptable collaterals, credit knowledge and credit track records.

The CSF is a fund generated by pooling the contributions of cooperatives or nongovernment organizations (NGOs), local government units (LGUs), partner institutions that serve as security for loans of MSMEs from banks in lieu of traditional collaterals.

Contributing cooperatives or NGOs and their MSMEmembers could borrow under the CSF but should not exceed 10 times its contributions to the fund at any given time.