Banks extend more loans to small enterprises

The banking system managed to extend more loans to small enterprise than required, with total loans amounting to P155.783 billion in the first quarter of the year, the Bangko Sentral ng Pilipinas (BSP) said.

Data from the BSP revealed that a total of P132.039 billion worth of direct loans were extended to small enterprises but banks still channeled about P16.397 billion worth of funds to alternative forms of compliance.

Under the law, banks are required to set aside at least six percent of their net loan portfolio for small enterprises. For the period in review, this amount reached at P58.123 billion.

The actual amount extended by the banking system, according to the BSP, represented a total of 16.08 percent of the net loan portfolio as banks outperformed the minimum requirement set by the BSP.

The BSP said universal banks set aside a total of P105.248 billion for small enterprise loans, significantly more than the minimum required amount of only P38.878 billion.

The bulk of the amount set aside by universal banks came from domestic universal banks, amounting to a total of P89.535 billion while government-owned universal banks alloted a total of P13.778 billion.

Private domestic unibanks outperformed their minimum requirement of P33.083 billion compared to the minimum requirement for government unibanks of P4.227 billion.

Foreign universal banks, on the other hand, set aside a total of P1.933 billion for small enterprises, against their minimum requirement of P1.568 billion.

The BSP said commercial banks, on the other hand, also outperformed their minimum requirement of P10.177 billion and set aside P13.978 billion. However, these banks actually extended only P8.85 billion worth of direct loans to small enterprises, making up for the rest of their requirement by opting for alternative forms of compliance.

The BSP said thrift banks and cooperative rural banks likewise outperformed their minimum requirements and extended small enterprise loans amounting to P24.456 billion and P12.10 billion, respectively.

On the other hand, the BSP said that 22 banks had failed to comply with the requirements – one domestic private universal bank, one domestic commercial bank, four thrift banks and 16 cooperative rural banks.

Alternative modes of compliance include equity investments in the Small Business Guarantee Fund Corp. (SBGFC), a state-owned corporation primarily involved in providing guarantees for small business loans.

According to the BSP, thrift banks and cooperative rural banks had the highest compliance rate, followed by government-owned universal banks and then by domestic unibanks and foreign commercial banks.