BSP starts database project for SMEs

Published November 5, 2020, 6:26 PM

by Bernie Cahiles-Magkilat

MB file photo.
MB file photo.

The Bangko Sentral ng Pilipinas (BSP) this month will start collecting data for its three-year credit risk database (CRD) project that will make it easier for small and medium enterprises (SMEs) to access financing from banks.

BSP Governor Benjamin E. Diokno announced Thursday that the BSP, with experts from Japan, is developing a CRD to generate statistical credit scoring models for banks’ use to determine SME borrowers’ capacity to pay loans.

So far, there are 18 banks that will participate in the project.

“Actual data collection will start in the third week of November,” said Diokno. “Orientation about the data collection process is being conducted for the officers of the 18 participating banks.” He said that a credit scoring model “will be built, validated, and launched” between the third quarter next year until the first quarter in 2023.

“Before the project’s completion in 2023, a governance and business model for the sustainable operation of the CRD will have been developed,” said Diokno, whose six-year term ends in mid-2023.

“The CRD is part of our strategic initiatives to improve SMEs’ access to finance and to support their post-pandemic recovery. (We are) committed to building a sustainable SME financing ecosystem which is a key driver of inclusive growth,” he said.

Basically, the CRD will address SMEs’ “reluctance” to approach a bank and apply for a loan because of his/her lack of credit history and acceptable collateral, and also because banks view SMEs as high risk.

Diokno explained that data providers – these are the 18 banks — will prepare their SME clients’ data. “The data, which are anonymized, are submitted periodically to the CRD for cleansing and consolidation. The CRD will then provide credit scoring for the financial institution, specifically, the probability of default of an SME. To evaluate the credit risk of current and potential borrowers, CRD members will initially be provided with a stand-alone scoring software,” he said.

Once completed, the CRD will boost the productivity and competitiveness of SMEs through enhanced access to credit, support their post-pandemic recovery, and foster the overall growth of the SME sector, said Diokno.

“Banks, meanwhile, may use the CRD to supplement or validate their internal credit scorecards. This will enhance their credit risk management. Banks may also leverage on data to be generated by the CRD in formulating business strategies,” he added.

The database is a joint project of the BSP and the Japan International Cooperation Agency. The BSP is also working with other experts from Japan through the CRD-Project Implementation Unit under BSP’s Center for Learning and Inclusion Advocacy.

The 18 banks participating in the project are government banks Land Bank of the Philippines and Development Bank of the Philippines, and other private banks, namely: Security Bank Corp., Rizal Commercial Banking Corp., Philippine Business Bank, Sterling Bank of Asia, China Savings Bank, Malayan Bank, Philippine Savings Bank, UCPB Savings Bank, Producers Savings Bank, Sun Savings Bank, AllBank, Overseas Filipino Bank, CARD SME Bank and First Consolidated Bank.