The Bangko Sentral ng Pilipinas (BSP) is working with banks on the standardization of the Micro, Small and Medium Enterprises (MSME) loan application process. BSP is also developing the concept note and draft standard loan application form. This initiative aims to streamline/ lessen the requirements of financial institutions and provide more access to MSMEs.
In a press release by the BSP, it has allowed loans to large enterprises and MSMEs to be considered banks’ alternative reserve compliance until end-2022 to help companies affected by the pandemic. Consequently, loans that are guaranteed by the Philippine Guarantee Corporation, the Agricultural Guarantee Fund Pool (AGFP), and the Agricultural Credit Policy Council (ACPC) were assigned a zero percent credit risk weight. This move is meant to encourage banks to lend to small farmers and fisherfolk.
In support of the exporters, BSP also promotes its Supply Chain Financing (SCF) project in the banking sector as an innovative financing approach to improve MSMEs access to finance by leveraging the receivables and inventory flows as well as supply chain relationships. The SCF approach can help deploy bank funds to smaller firms that banks may be unable or unwilling to serve using the traditional financing approach.
Listed below are other BSP initiatives on Financing as part of its commitment to the Export Development Council (EDC) in implementing the strategies of the Philippine Export Development Plan (PEDP).
- Peso rediscounting facility for exporters’ dollar and yen rediscounting facility
BSP opened the program that allows banks to rediscount their existing client’s loan, including exporter-borrowers, which in return, free up some of the bank’s funds that can be used for further lending operations, including those intended for exporters.
- Currency Rate Risk Protection Program
The department reoffered the program, a facility between the BSP and the universal/commercial banks for bank clients desiring to hedge their foreign currency obligations against foreign exchange (FX) depreciation.
- Credit Surety Fund (CSF)
These give support to the MSME funding in partnership with the Cooperative Development Authority. It provides surety cover of up to 80 percent for loans granted by banks to MSMEs to address difficulties in accessing credit facilities.
- Agriculture Value Chain Financing (AVCF)
In partnership with the Asian Development Bank (ADB), the BSP is implementing this pilot project to build select banks’ capacity to use an information-based lending approach that uses acquired information and understanding of the value-chain process to adequately assess risks in lending, in contrast to collateral-based lending.