Banks set P148 B for MSME loans

Published April 19, 2021, 6:00 AM

by Lee C. Chipongian

Banks have allocated P148 billion new loans to micro, small and medium enterprises (MSMEs) as of end-February as alternative compliance to the reserve requirements (RR) of the Bangko Sentral ng Pilipinas (BSP).

As part of relief measures to cope with the effects of the COVID-19 pandemic, the BSP has allowed the use of loans to MSMEs and large enterprises as alternative compliance with RR against deposit liabilities and deposit substitutes until the end of 2022. The Monetary Board however can decide to close the relief measure earlier if they find it’s no longer needed. These loans are new or refinancing for existing MSME loans and critically-affected large enterprises.

The BSP has put a limit of P300 billion for MSMEs and P425 billion for large enterprises as alternative compliance with the RR. As of the reserve week ending February 25, MSME loan for RR compliance is only 10.4 percent of total required reserves. There is still P151.3 billion-worth of unutilized loanable amount to MSMEs.

As for large enterprises, bank allocations have reached P30.8 billion or 2.2 percent of the required reserves in the same period. The available balance for large enterprises under the relief measures is P394.2 billion.

Before the relief measure was approved, MSME loan portfolio was only P8.7 billion in April last year.

The BSP allowed other modes of alternative compliance to MSMEs and large enterprises such as loans that are current and not past due or non-performing are eligible to be considered as alternative compliance to the RR. The exception is an MSME loan or large enterprise loan that has been renewed or restructured.

Loans granted to MSMEs and large enterprises that are not part of conglomerate structure are counted as part of banks’ compliance with the RR rule.

The BSP have other relief measures that are MSME-related such as temporarily reducing from 75 percent to 50 percent the credit risk weight of MSME loans that are current in status and assigning zero weight to MSME loans covered by guarantees from the Philippine Guarantee Corporation, Agricultural Guarantee Fund Pool, and the Agricultural Credit Policy Council.