BSP to establish credit surely fund in Baguio

BAGUIO CITY – The Bangko Sentral ng Pilipinas will establish a Credit Surety Fund in the city purposely to provide duly organized cooperatives with access to funding to facilitate implementation of priority projects beneficial for members.

Peter B. Favila, Monetary board member, and Mayor Mauricio G. Domogan will formally sign the memorandum of agreement that will establish the Baguio City Credit Surety Fund and providing around P20 million as initial capital for the revolving fund.

 BSP initiated the Credit Surety Fund in 2008 and it is a credit enhancement scheme established by the pooling of cash contributions from participating cooperatives, local government units and partner institutions.

           

According to Domogan, the CSF will serve as surety for loans extended by banks to micro, small and medium enterprises participating in the program in lieu of hard collaterals.

           

“The scheme will significantly improve the bankability of cooperatives and capital-short businessmen who are often confronted with difficulties in obtaining loan accommodations due to lack of collaterals, credit knowledge and credit track record,” Domogan said.

           

Under the program, credit facilities can now be accessed even in the absence of hard collaterals through the issuance of a survey cover by the CSF in favor of the lending bank.

           

Initially, seven cooperatives and non-government organizations have signified their intention to contribute an aggregate amount of P2.8 million to the Baguio CSF, while the city government of Baguio pledged P2 million to start the ball rolling in terms of providing capital to those cooperatives needing the assistance.

           

“The CSF has already been institutionalized in 19 provinces and 6 cities over the past five years of its existence, Favila said.

           

With the integrated training component system to help strengthen participating cooperatives in the areas of business plan preparation and loan appraisal, Favila pointed out businessmen are expected to take advantage of the credit enhancement scheme that is geared towards sustaining the liquidity of cooperatives and organizations that stand to avail of the funding assistance.

           

 “The CSF will enable capital-short entrepreneurs to explore more business models that would otherwise be difficult in a regular credit financing due to unavailability of eligible securities, Favila added.

           

The BSP allows the rediscounting of loans granted under the CSF program to encourage banks to lend more to the micro, small and medium enterprise sector.

           

Aside from the funds to be contributed by the cooperatives and local governments, BSP will also provide a P20 million counterpart in order to ensure that more cooperatives will be able to avail of the financing scheme and be able to address the needs of their members aspiring for more capital to bankroll their respective projects. 

           

Domogan cited the importance of establishing the CSF so that there will be sufficient liquidity among local entrepreneurs for them to be able to improve the quality of their products and become globally competitive.-- Dexter A. See