Bangko Sentral to launch credit surety program in Marikina

MANILA, Philippines - The Bangko Sentral ng Pilipinas will launch its credit surety program in Marikina City in line with efforts to make bank loans more accessible to a significant number of micro-enterprises.

A credit surety fund is a pool of resources, which members of cooperatives may tap as collateral when they apply for bank loans.

Established in August 2008, the credit surety fund program is designed to increase the flow of credit in the countryside and to strengthen the micro, small, and medium enterprises industry, which is considered vital in boosting the growth of the economy.

As of Nov. 10 this year, 11 cooperatives confirmed to participate in the Marikina City CSF with total pledges reaching P2.9 million to the Marikina CSF.  The Marikina City government, on the other hand, initially committed P5 million to the fund.

Other contribution will come from partner institutions such as the Industrial Guarantee and Loan Fund, the Development Bank of the Philippines and the Land Bank of the Philippines.

Through the CSF, the participating cooperatives and their MSME members with viable business plans can obtain loans from banks even without collaterals, ushering in more economic activities and creating more job opportunities that translate to an increase in household income.

In case of a default, the CSF will pay the bank while the cooperative will collect the unpaid loan and interest from the borrower and remit these to the CSF.

The BSP, for its part, allows banks that extend loans under the CSF program to rediscount their collectibles in order to come up with cash that can be lent to other borrowers.

The CSF program has been established in 23 provinces and eight cities nationwide.

About 70 percent of employment in the country and more than 90 percent of enterprises are composed of MSMEs.