The Bangko Sentral ng Pilipinas (BSP) raised the need to ensure credit standards in the country to guarantee a strong financial system that is supportive of the public’s needs.
BSP Governor Amando Tetangco Jr. said that some banks were complying more than the 10 percent allocation on Micro, Small and Medium Enterprises (MSMEs) lending.
“We’ve been telling the banks that this is probably the way of the future because we’d like to see the expansion of the MSME sector and as the sector expands so is the financial requirements,” he said.
The central bank chief said penalty for non-compliance on the MSME lending rule had been raised but stressed that more than the compliance issue what is important is the support being extended to the MSME sector.
“If we can have these MSMEs driving economic growth then the growth would be broad-based, less susceptible and more resilient to shocks,” he said.
Republic Act (RA) 9501, otherwise known as the Magna Carta for Micro, Small and Medium Enterprises (MSMEs), requires banks to set aside eight percent of their portfolio for micro and small enterprises and at least two percent for medium enterprises.
Violators will be penalized with not less than P500,000 and the law states that 90 percent of the penalty will be given to the Micro and Small Enterprise Development (SMED) Council. The balance of 10 percent will be given to the BSP “to cover for administrative expenses.”
Although the penalty for RA 9501 violators have been increased, BSP managing director for Central Supervisory Support Sub-Sector Johnny Noe E. Ravalo said compliance to the law should not be the only focus.
“The issue is we need to build a financial system that responds to the needs of the Filipino people and the Filipino people,” he said.
Ravalo said the P500,000 fine is pro-rata but the central bank uses a ratio vis-à-vis compliance on the 10 percent requirement.
He said implementation of the pro rata penalty was based on the approval of lawmakers but some people had suggested that the P500,000 should be the minimum penalty.
“It’s mandated credit… We’re not telling the banks to lend just for the heck of it because there’s credit standard and the money they are lending are not theirs but other people’s money,” he said.
“What is critical is how the (MSME) loan system will be improved without compromising credit standards,” he said.
Central bank data show that as of March 31, 2012 the number of banks involved in micro-finance totaled to 187 and borrowers number to about 976.94 million.
Outstanding loans extended under this program now reach about P7 billion and deposits to about P186 million. [PNA]
BSP Governor Amando Tetangco Jr. said that some banks were complying more than the 10 percent allocation on Micro, Small and Medium Enterprises (MSMEs) lending.
“We’ve been telling the banks that this is probably the way of the future because we’d like to see the expansion of the MSME sector and as the sector expands so is the financial requirements,” he said.
The central bank chief said penalty for non-compliance on the MSME lending rule had been raised but stressed that more than the compliance issue what is important is the support being extended to the MSME sector.
“If we can have these MSMEs driving economic growth then the growth would be broad-based, less susceptible and more resilient to shocks,” he said.
Republic Act (RA) 9501, otherwise known as the Magna Carta for Micro, Small and Medium Enterprises (MSMEs), requires banks to set aside eight percent of their portfolio for micro and small enterprises and at least two percent for medium enterprises.
Violators will be penalized with not less than P500,000 and the law states that 90 percent of the penalty will be given to the Micro and Small Enterprise Development (SMED) Council. The balance of 10 percent will be given to the BSP “to cover for administrative expenses.”
Although the penalty for RA 9501 violators have been increased, BSP managing director for Central Supervisory Support Sub-Sector Johnny Noe E. Ravalo said compliance to the law should not be the only focus.
“The issue is we need to build a financial system that responds to the needs of the Filipino people and the Filipino people,” he said.
Ravalo said the P500,000 fine is pro-rata but the central bank uses a ratio vis-à-vis compliance on the 10 percent requirement.
He said implementation of the pro rata penalty was based on the approval of lawmakers but some people had suggested that the P500,000 should be the minimum penalty.
“It’s mandated credit… We’re not telling the banks to lend just for the heck of it because there’s credit standard and the money they are lending are not theirs but other people’s money,” he said.
“What is critical is how the (MSME) loan system will be improved without compromising credit standards,” he said.
Central bank data show that as of March 31, 2012 the number of banks involved in micro-finance totaled to 187 and borrowers number to about 976.94 million.
Outstanding loans extended under this program now reach about P7 billion and deposits to about P186 million. [PNA]
