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Implementing Rules for CSF Law Drafted

12.27.2016

The Credit Surety Fund (CSF) Program is a credit enhancement scheme developed by the Bangko Sentral ng Pilipinas (BSP). It aims to increase the credit worthiness of micro, small and medium enterprises (MSMEs) that are experiencing difficulty in obtaining loans from banks due to lack of acceptable collateral, credit knowledge and credit track record.

A total of 45 CSFs are now established in 30 provinces and 15 cities nationwide. Three more CSFs are proposed to be launched in 2017. These will be in the Provinces of Marinduque and Ilocos Sur, and in the City of Mandaue.

As of 30 September 2016, cumulative approved loans for 15,317 beneficiaries reached PhP3.13 billion, or an increase of 37% from the 2015 year end cumulative approved loans of PhP2.28 billion. Of the total loans approved, PhP2.80 billion was released to 15,283 beneficiaries. Outstanding balance as of 30 September 2016 is PhP892 million, of which PhP723 million is covered by the CSF.
 
Aside from credit enhancement, the other major component of the CSF is the Capability Enhancement Program which aims to strengthen the skills of cooperatives and their member-MSMEs in the areas of credit, management and finance to ensure the success and sustainability of the CSF Program.  To date, free trainings provided to CSF member-cooperatives, are as follows:

Name of Training

No. of Runs

No. of Participants 

No. of CSFs benefited

Credit Appraisal and Monitoring Course

43

1,182

40

Appreciation of Financial Statements (until Yr. 2013 only)

26

821

27

Financial Management Seminar (Replaced AFS in 2014)

15

473

17

Risk Management Seminar (Started in 2014)

11

352

22

Entrepreneurship and Business Management

12

369

11


On 6 February 2016, Republic Act No. 10744, otherwise known as the “Credit Surety Fund Cooperative Act of 2015,” was passed into law. It is an Act providing for the creation and organization of the CSF cooperatives to manage and administer credit surety funds.  The law institutionalized the CSF Program.  Some of the salient features of the law are as follows:

  1. Grant of juridical personality to a CSF Cooperative, evidenced by a Certificate of Registration from the Cooperative Development Authority (CDA);
  2. Exemption from the Insurance Code, whereby the issuance of surety agreements by the CSF Cooperatives shall not be deemed as doing insurance business;
  3. Tax exemption of a CSF Cooperative;
  4. Limited liability of CSF stakeholders to the extent of the assets of the CSF Cooperative;
  5. Maximum loan availment by qualified borrowers under the program shall not exceed ten times its contribution to the fund.

An Inter-Agency Committee composed of representatives from CDA, BSP and the Department of Finance was formed to draft the Implementing Rules and Regulation (IRR) of the CSF law.  Public hearings on the draft IRR were conducted in different parts of the country from 9 August 2016 to 18 October 2016. 

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