The Bangko Sentral ng Pilipinas (BSP) is keeping up the momentum of lending support for micro, small and medium-sized enterprises (MSMEs) as they strive to retain their client base and expand their market amid continuing disruptions from the COVID-19 pandemic.
According to the BSP, the banking system has allocated an average of P202.2-billion loans to MSMEs as of the first week of November in compliance with the reserve requirement rules for lenders, approaching the limit of P300 billion.
That amount is more than 23 times compared to the P8.7 billion in MSME loans reported in April 2020.
In July last year, the BSP reduced the reserve requirement for thrift banks to 3 percent of their funds from 4 percent, and of rural banks to 2 percent from 3 percent.
The reduction was expected to increase the lending capacity of these banks to support the financing requirements of MSMEs as rural community-based clients.
To further encourage banks to lend to MSMEs, the BSP has introduced a package of regulatory relief and incentive measures.
One such measure is the Credit Risk Database (CRD) project which, done in partnership with the government of Japan, is intended to help improve MSMEs’ access to finance by lessening banks’ dependence on collateral during credit evaluation.
The risk-based lending approach under the CRD uses credit scoring models to assess the capacity of small and medium enterprises to repay their loans, instead of collateral.
The BSP and the Cooperative Development Authority also continue to work on the Credit Surety Fund program, a credit enhancement scheme that provides security for loans of MSMEs by way of a surety cover. INQ