BSP expands credit surety fund coverage

The Bangko Sentral ng Pilipinas (BSP) is set to launch a credit enhancement scheme in five more provinces within the year, bringing to over 50 the number of credit surety fund (CSF) since the program was launched nine years ago.

BSP Governor Amando Tetangco Jr. said the central bank would continue to develop new partners to expand the reach of credit enhancement scheme to develop a more inclusive financial system that promotes inclusive growth.

“CSFs have proven effective in ensuring shared and inclusive growth,” he said.

Based on an impact assessment survey conducted in 2014 and 2015, Tetangco said credit obtained from CSFs by micro, small and medium enterprises (MSMEs) allowed them to increase the average number of their employees by 30 percent, their sales by 26 percent, and their monthly profit by 41 percent.

Likewise, he added the revenue of local government units increased 37 percent from taxes and fees.

Tetangco led the signing of the implementing rules and regulations of Republic Act 10744 otherwise known as the Credit Surety Fund Cooperative Act of 2015 together with Cooperative Development Authority chairman Orlando Ravanera.

BSP Deputy Governor Diwa Guinigundo said the five CSF to be launched this year would be in Tacloban, Mandaue, Sta. Rosa in Laguna, Dinagat Island and Batangas.

Just last week, Guinigundo led the launching of the CSF in La Union.

This brought the total number of CSFs to 46 composed of 30 provinces and 16 cities nationwide with a total of P3.5 billion approved loans. Of the total amount, P3.2 billion has already been released, aiding 16,356 beneficiaries in various industries.

Guinigundo explained the guidelines would establish consistency in the implementation of the CSF Act, standardize the technical and financial support as well as delineate the roles of the concerned government institutions.

“We now have the Act that provides a legal personality,” he said.

The CSF was initiated by the BSP in 2008 for MSMEs that could not access bank credit due to lack of hard collaterals and credit history.

The fund is created through the pooling of monetary contributions from cooperatives, non-government organizations, local government units and partner institutions.

The fund serves as an alternative security in lieu of the hard collaterals required by banks, thereby helping capital-short MSMEs with viable business plans gain access to bank loans.