P7B MSME loans released under CSF


An estimated P6.93 billion of micro, small and medium enterprise (MSME) loans under the Credit Surety Fund (CSF) have been released as of end-December 2020, according to a central bank CSF survey.

BSP Governor Benjamin E. Diokno (Credit: BSP photo)

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said that as of end-March this year, there are 55 CSFs nationwide and 14 are registered with the Cooperative Development Authority (CDA).

By end-2021, Diokno said the number of CSFs will expand by another 15 to 70. “At least 15 more CSFs are expected to be registered by year-end with the rest likely to complete the process next year,” he said during his weekly online “GBED Talks”.

MSME loans released via CSF started with only P36.9 million in 2009 to P2.08 billion by 2015, the same year the BSP’s CSF program became a law as Republic Act No. 10744 or the Credit Surety Fund Cooperative Act which enabled the creation and organization CSF cooperatives to manage and administer credit surety funds for member-cooperatives or NGOs and MSMEs.

As of end-2020, an estimated 17,527 beneficiaries have benefited from the CSF program, said Diokno, from only 66 in 2009 and 15,233 in 2015.

The CSF is a credit enhancement mechanism that helps the collateral-challenged MSMEs access to bank financing. It provides a surety cover of up to 80 percent of the bank loan and as an alternative to hard collateral.

Under RA 10744, the CDA is the CSF’s lead implementing government agency for the registration, regulation, monitoring and supervision of CSF cooperatives. “For its part, the BSP spearheads the promotion, encouragement, creation and organizational development of CSF cooperatives all over the country; facilitates technical assistance like training and seminars; assists the CDA in setting the criteria and qualifications for CSF cooperatives; and provides other assistance as determined by the Monetary Board,” said Diokno.

With the COVID-19 pandemic, some of the CSF activities were halted and postponed but Diokno said its active promotion continues while efforts to improve the internal capacity of CSF cooperatives are also ongoing.

“In 2020, we conducted five webinars for the directors and officers of the registered CSF cooperatives. Topics ranged from managing liquidity, governance and management, legal concepts on sureties, credit appraisal and monitoring, and loan collection and debt management. These are meant to help CSFs address challenges arising from the pandemic,” said Diokno.

He also said that as end-April, the BSP has conducted four webinars that covered digital payments and the new economy, as well as financial inclusion in the new economy, data privacy, MSME programs of the Department of Trade and Industry, and the Philippine Identification System.

Last March, the BSP also signed a memorandum of agreement with CDA to formalize cooperation arrangements and to ensure effective implementation of the SCF law, said Diokno.

“The CSF demonstrates the power of partnerships (by) bringing together regulators, financial institutions, local government units, cooperatives and non-government organizations, the CSF becomes an effective tool not only for sustainable MSME financing, but also for economic development and poverty reduction,” he also said.