BSP brings credit surety fund to North Cotabato, Davao Oriental
Davao City (7 September) -- The Bangko Sentral ng Pilipinas partnered with the provincial governments of North Cotabato and Davao Oriental to spearhead the creation of a Credit Surety Fund in each of the two provinces.
BSP Governor Amando M. Tetangco, Jr., North Cotabato Governor Jesus N. Sacdalan and Davao Oriental Governor Corazon Malanyaon will lead the signing of Memoranda of Agreement that will establish the North Cotabato Credit Surety Fund (NCCSF) and Davao Oriental Reach Surety Fund (DORSF) at a formal ceremony to be held at the BSP Davao Regional Office Convention Hall in Davao City on Friday, 9 October 2009, at 10 o'clock in the morning.
The Credit Surety Fund, or CSF, is the government's pro-active approach to support micro, small, and medium entrepreneurs or MSMEs who often find themselves hard pressed for loans from financial institutions due to lack of collateral, unstable income, lack of business experience, and low paying capacity.
It is a fund created from contributions by well-capitalized and well-managed cooperatives and counterpart contributions from the provincial government and donor institutions. It functions by providing surety cover that will serve as collateral to guarantee the loans of MSMEs from banking institutions.
The CSF has been hailed as the right formula and effective tool for countryside development as it energizes cooperatives to become agents of progress in their own communities by supporting the growth of entrepreneurs and creating more jobs. It has also received kudos for helping cooperatives help themselves.
Sixteen cooperatives from North Cotabato have signified their intention to join NCCSF and have pledged a total of P2.81 million in contributions. Eleven cooperatives, on the other hand, have committed to join DORSF and agreed to contribute a total of P1.2 million.
The local governments of both provinces have committed to match these contributions. The Development Bank of the Philippines, Land Bank of the Philippines and the Industrial Guarantee and Loan Fund have all expressed strong support for the program with pledges of contributions to augment the fund.
Aside from having new windows for financing, the participating cooperatives and their member MSMEs will also benefit from current trends in loan management via the training component added by the BSP in the program. BSP has tied up with the University of the Philippines Institute for Small-Scale Industries to help participating cooperatives improve their credit appraisal, loan management and marketing skills.
The BSP Monetary Board has also agreed to allow the refinancing of loans granted under the CSF to ensure that more small businessmen are benefited by the program.
Participating banks, for their part, find the program beneficial as credit risks associated with extending loans to MSMEs are mitigated. It also makes it easier for them to comply with the requirements of the Magna Carta for MSMEs. Local governments, on the other hand, stand to benefit from increased economic activities in the form of additional taxes and fees. (BSP/PIA XI) [top]