BSP, CDA push wider access to credit for cooperatives, MSMEs | Inquirer Business
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BSP, CDA push wider access to credit for cooperatives, MSMEs

By: - Reporter / @daxinq
/ 05:07 PM April 05, 2021

MANILA, Philippines—The Bangko Sentral ng Pilipinas (BSP) wants small cooperatives and small businesses to have better access to loans that could help scale up their operations and, in doing so, improve the economic condition of more Filipinos.

The BSP and the Cooperative Development Authority (CDA) have agreed to work closer together to better implement the provisions of the Credit Surety Fund Cooperative Act that became law in 2015.

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“The central bank is committed to support the development of the credit surety fund as a vital credit infrastructure for sustainable micro, small and medium enterprise financing,” BSP Governor Benjamin Diokno said in a statement.

“Our partnership with the Cooperative Development Authority aims to harness collaborative efforts toward our shared goal of empowering cooperatives and MSMEs through the credit surety fund,” he said.

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Surety funds are credit enhancement mechanisms designed to address the challenges of MSMEs and their cooperatives in accessing bank financing despite lack of collateral and credit history.

Managed and administered by a cooperative, a surety fund is generated primarily from the contributions of well-capitalized cooperatives and local government units, as well as government financial institutions like the Development Bank of the Philippines, Land Bank of the Philippines and the Philippine Guarantee Corp.

Surety funds serve as security in lieu of hard collateral for loans extended to qualified cooperative and MSME borrowers.

By providing cooperatives and small firms with greater financing opportunities, these funds are envisioned to support MSMEs become more valuable contributors in economic development and job generation in their local communities.

To date, 55 credit surety funds have been established, 14 of which are already registered as cooperatives with the CDA while others are in the process of registration.

“The memorandum of agreement between the Cooperative Development Authority and the Bangko Sentral ng Pilipinas manifests a strong convergence between the two agencies with the end in view of empowering MSMEs and cooperatives,” CDA chair Orlando Ravanera said.

“Having a shared responsibility under the creditr surety fund law, the [agreement] clearly spells out the respective roles and responsibilities of the parties for a proper and effective implementation of the law,” he said.

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The law designates the CDA as lead implementing government agency responsible for the registration, regulation, monitoring and supervision of surety fund cooperatives.

The BSP, on the other hand, is mandated to spearhead the promotion, creation and organizational development of surety fund cooperatives; facilitate acquisition by these cooperatives of technical assistance; and assist the CDA in setting the criteria and qualifications for cooperatives.

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TAGS: Agreement, BSP, cooperatives, economy, Loans, msmes
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