Following the passage of Republic Act No. 10744, otherwise known as the Credit Surety Fund (CSF) Cooperative Act of 2015 on 06 February 2016, heads of the Bangko Sentral ng Pilipinas, Department of Finance and Cooperative Development Authority are set to sign its Implementing Rules and Regulations (IRR) on 20 June 2017 at the Bangko Sentral ng Pilipinas Complex, Malate, Manila.
The CSF is a fund generated from contributions of well-capitalized and well-managed member-cooperatives/non-government organizations (NGOs), Local Government Units, Government Financial institutions and other institutions/ government agencies. It shall serve as security for the loans that will be obtained by qualified MSME borrowers from banks by way of issuance of surety cover, in lieu of hard collaterals. It is designed to provide MSMEs with more inclusive access to credit, thereby enhancing their sustainability and growth. It aims, among others, to (a) enhance the creditworthiness of MSMEs and broaden their access to the credit facilities of banks; (b) sustain the continuous flow of credit in the countryside through the establishment of well and prudently managed CSFs which shall serve as surety covers; (c) build up the capability in the areas of credit evaluation, loan and risk management, and good governance principles; and (d) generate employment and contribute to the poverty alleviation program of the government through increased investments and economic activities.
Based on the 2015 statistical data provided by the Philippine Statistics Authority, 99.5% of the establishments in the Philippines are MSMEs. However, one of the roadblocks for their continued growth is access to financing. They often find it difficult to comply with the acceptable collaterals that banks usually require which often lead them to succumb to loan sharks or the “5-6” lenders who charge exorbitant interest rates. The CSF Program removes this specific roadblock to MSME’s growth.
The IRR of this Act will establish consistency in the implementation of the CSF Act, standardize the technical and financial support and delineate the roles of the concerned government institutions. As of 31 March 2017, a total of 45 CSFs were established in 30 provinces and 15 cities nationwide with a total of PhP3.5 billion approved loans, of which PhP3.2 billion was already released, aiding 16,356 beneficiaries in various industries.