Banks getting ready to implement MSME

Small and medium banking institutions are being prepared for the full implementation of the Republic Act 9501, otherwise known as the new Magna Carta for Micro-Small and Medium Enterprises (MSMEs).

The University of the Philippines-Institute for Small Scale Industries (UPISSI), in partnership with German Technical Cooperation (GTZ) Private Sector Promotion (Smedsep) have joined hands to capacitate rural banks in the country on how to effectively provide financial assistance, through lending to the MSMEs.

The new Magna Carta for SMEs requires that all banks should lend at least 10 percent of its loan portfolio to MSMEs.

Recently, the UPISSI, together with GTZ’s Smedsep have rolled out two nationwide training products namely, the SME Finance Seminar for bank executives and SME Credit Appraisal and Monitoring Training for loan officers.

Participating in the training series are representatives of Rural Financial Institutions (RFIs) that are supported by the Land Bank of the Philippines (LBP) and the Department of Agrarian Reform (DAR) under the World Bank-assisted Second Agrarian Reform Communities Development Project (ARCDP 2).

The initial 12 batches of training programs for the ARCDP 2 beneficiaries kicked off in August this year with the DAR undersecretaries and senior officers participating in the one-day SME Finance Seminar.

Since then, two batches more of SME Finance Seminars and four batches of the six-day CREDIT Training have been conducted in Tagaytay, Baguio and Davao. The training program series will continue until this month of October and will include the two training batches slated in Cebu.

The training series builds RFIs’ capacity in the application of the cash flow based lending technology. Expectedly, this know-how will enable the RFIs to lend more to the MSMEs and capacitate them to comply with the RA 9501 directive.

The SMEDSEP, a development cooperation project between the Republic of the Philippines and the Federal Republic of Germany, aims to improve the business and investment climate for SME in the Philippines especially in the Visayas. 

SMEDSEP contributes to the efforts of the Philippine government to improve the framework conditions for private sector development in the country.

It is implemented in partnership with the Department of Trade and Industry (DTI) at national, regional and provincial levels and the GTZ on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ).

The SMEDSEP’s financial services aim to support financial institutions in providing more finance to SME on a sustainable basis. This requires improving the capacities of partner financial institutions to efficiently manage commercially viable SME portfolios and to offer innovative and target group oriented financial services.

GTZ, on the other hand, is an international cooperation enterprise for sustainable development with worldwide operations owned by the German Government. For 30 years, it has been providing forward looking contributions to political, economic, ecological and social development in partner countries.

This German-cooperation initiative also supports reform and change processes in an increasingly globalized world, often working under difficult conditions. GTZ‘s major approach to facilitate change is promoting capacity development of people and partner organizations as well as improving institutions and frame conditions in partner countries. The joint projects and programs are outcome and impact oriented. They contribute towards socioeconomic progress.