Bangko Sentral eyes more credit surety funds

The Bangko Sentral ng Pilipinas said it supported the creation of more credit surety funds (CSFs), which are pools of money that serve as collateral for micro-loans, as it stressed the need to help micro-enterprises to boost overall economic growth.

BSP Governor Amando Tetangco Jr. said existing CSFs, which are relatively new, have helped make bank loans much more accessible to a significant number of micro-enterprises.

The existing 20 CSFs in 16 provinces in the country have helped achieve the goal of boosting growth of the micro-enterprise sector, the BSP governor said.

Contributions to CSFs are mainly from local government units, the Industrial Guarantee and Loan Fund, and the state-owned Development Bank of the Philippines and Land Bank of the Philippines. The BSP helps in the organization of the institutions for the creation of CSFs.

The objective of CSFs is to make bank loans accessible to micro-enterprises, which normally do not have assets to serve as collateral. With CSFs, beneficiaries are given certificates of guarantee that they may present to banks as collateral when applying for loans.

Tetangco said that although micro-loans in the country were growing, there remained a significant room to make micro-loans available to lower-income enterprises.

“We need to think out of the box in mobilizing savings in the region, providing extended financial access through non-mainstream channels and creating alternative sources of financing,” Tetangco explained. “We need to make our financial system more inclusive.”

Outstanding bank loans to micro-enterprises currently stand at P7 billion, benefiting nearly a million borrowers.

Tetangco said the success stories among micro-enterprises that were able to obtain bank loans proved the importance of access to credit.

“We have seen how households and communities have been transformed by successful microfinance ventures. But we need to do more; we need to further broaden and deepen its reach,” Tetangco said.

He said helping micro enterprises succeed was one efficient way to lift people from poverty and accelerate growth of the economy.

About 70 percent of employment in the country and more than 90 percent of enterprises are composed of micro, small and medium enterprises.