BSP: MSME credit rises

This is a big relief for small businesses, which will help lift the economy as MSME comprise the biggest chunk of the country’s businesses

Credit availed by micro, small and medium enterprises (MSME) saw a significant increase as of endAugust 2020, the Bangko Sentral ng Pilipinas (BSP) said.

Data from the central bank shows that loans extended for MSME in fulfilment of banks’ reserve requirement (RR), spiked to P106.7 billion in August, a P96.7 billion jump from only P9.3 billion in April.

BSP governor Benjamin Diokno expressed his satisfaction with the development given the efficacy of their move to consider lending to MSME as an alternative for banks’ RR.

“This is a big relief for small businesses,” says Diokno, adding that such will help lift the economy as MSME comprise the biggest chunk of the country’s businesses.

Still, the BSP noted that smaller banks such as rural and cooperative banks have also availed of the relief measure by lending out some P2 billion to MSME as of end-August 2020.

The central bank executed a salvo of monetary easing both on its key interest and RR rates, reducing the former by 175 basis points and 200 basis points for the latter year-to-date.

Key interest rate of the BSP now stands at 2.25 percent, while current RR sits at 12 percent, with another 200 basis points waiting for its fulfilment as the Monetary Board allowed the BSP chief to reduce RR by a total of 400 basis points for 2020.

The BSP infuses about P100 billion worth of fresh liquidity in the financial system for every 100 basis point cut on its RR.

PHOTOGRAPH COURTESY OF DA-RFO-6 DA-RFO-6 regional executive director Remelyn Recoter says the government turned over P193.7 million worth of farm machinery and equipment to Region-6 to enable rice resiliency and competitiveness in Western Visayas.