BSP microfinance support commended

Wednesday, January 11, 2012
CENTRAL Bank’s decision to extend until December 31, 2014 the regulatory exemption allowing small to medium enterprises (SMEs) to apply for bank loans without submitting audited financial statements and/or income tax returns will especially be beneficial to those living in rural areas.
“Micro, small and medium scale enterprises provide so many Filipinos with jobs and stable income so we should focus on providing them the funding they need to keep operating,” said Senator Edgardo Angara in yesterday’s statement to Sun.Star.
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“However, most of these small businesses lack the proper paperwork which prevents them from borrowing the capital they need so this extension is much needed.”
The Bangko Sentral ng Pilipinas said the three-year extension is aligned with the BSP’s long-standing thrust of providing support to micro-and small-enterprises by assisting these institutions gain greater access to credit from banks.
This is also to support entrepreneurs who are vital partners in the development of the financial market and of the broad economy. “This temporary exemption from existing regulations is aimed at finding ways to help these entrepreneurs obtain greater access to credit in terms of less documentary requirements that usually characterize bank loans.”
Angara said close to a million SMEs successfully borrowed from the BSP in 2011 with an average loan of P7,260 per proprietor but stressed that financial institutions should also strive to improve their credit information system so that loans are processed more efficiently. “With this, we can expect to improve the availability of credit especially to small borrower entrepreneurs.”
Angara authored the Credit Information System Act, which was signed into law in 2008 as Republic Act 9510. The law created the Credit Information Corporation, which aims to establish a comprehensive and centralized credit information scheme that will shorten processing time and reduce transaction costs.
“A reliable credit system will effectively address the need of financing institutions to check the track record of their borrowers, resulting in less credit risks and more stability,” he explained. (CGC)

Published in the Sun.Star Bacolod newspaper on January 11, 2012