Amando M Tetangco, Jr: Launching of the Paranaque City Credit Surety
Fund
Speech by Mr Amando M Tetangco, Jr, Governor of Bangko Sentral ng Pilipinas (BSP, the
central bank of the Philippines), at the Launching of the Paranaque City Credit Surety Fund,
Manila, 3 November 2015.
* * *
This is truly a happy event. Today, we launch the Paranaque City Credit Surety Fund with
Mayor Olivarez. Paranaque is the 3rd city in Metro Manila to have its own CSF - after
Quezon City and Marikina (both in 2014); it is also the 22nd in Luzon and the 44th CSF in the
country. This CSF is bound to benefit the Paranaque-based Micro Small and Medium
Enterprises or what we call MSMEs.
Indeed, our CSF program has come a long way from 2008 when we launched the 1st CSF in
the Province of Cavite. It has been a challenging but fruitful seven years. We have seen how
MSMEs that lack collateral, gain access to bank loans and grow their business with the
support of the credit surety fund program.
As of August 2015, the 43 operating CSFs in the country have benefitted 14,600 MSME
borrowers who received a total of P1.7 billion in bank loans.
But more than these aggregates, we are particularly proud that past due ratio has been at a
minimal 0.93%. Clearly, CSF leaders across our country implement the program with care
and due diligence, to ensure that MSMEs given bank guarantees are viable and have a good
track record of paying their obligations. In this manner, many more MSMEs and cooperatives
stand to benefit from the CSF program.
In this connection, the total trust fund of CSFs has also continued to grow - it now stands at
P515 million, 8% higher than last year. In other words, the CSFs as a whole, can guarantee
more bank loans.
And so, we welcome the City of Paranaque to the growing CSF community.
Actually, simple lamang po ang gusto nating marating sa CSF - ang mapa-buti ang
kabuhayan ng ating mga kababayan sa MSMEs sa pama-magitan ng pa-utang mula sa
bangko.
Traditionally, MSMEs who lack collateral turn for funding to informal lenders with onerous
conditions and interest rates that can reach over 1,000 percent a year. With the CSF
providing guarantees to banks for loans extended to their coop members, MSMEs gain
access to bank loans at much lower interest rates. As monitored by the Bangko Sentral ng
Pilipinas, loans granted under the CSF program range from 8-12% a year, a fraction of the
cost of borrowing from informal lenders!
This is the reason why the BSP has been working on promoting financial inclusion across the
country for over ten years now.
In July this year, the BSP and 12 other government agencies launched the National Strategy
for Financial Inclusion (or NSFI). Our objective is to avoid duplication and to ensure optimum
results from our collective efforts and deployment of resources in extending the reach of our
financial system to the unserved and the underserved.
This milestone event was also highlighted by the visit of Queen Maxima of the Netherlands
who attended the launching with a commitment of assistance and partnership not only from
the Netherlands, but also from the United Nations, in her capacity as the designated UN
Secretary General's Special Advocate for Inclusive Finance for Development. As described
by Queen Maxima, "the Philippines should be the voice on financial inclusion." Indeed, our
financial inclusion program is considered an international best practice model.
Through the NSFI, we envision a regionally-responsive, development-oriented and inclusive
financial system that provides for the evolving needs of a diverse Filipino public. One of the
priority areas of concern in the NSFI is access to credit, which is being addressed through
this CSF program.
Our survey early this year indicated that about 47 percent of Filipino adults borrow money
and most of them access loans from informal sources such as family members and informal
lenders. Only a few obtained credit from formal institutions such as lending/financing
companies (12%), cooperatives (10.5%), microfinance non-government organizations
(NGOs) (9.9%), and banks (4.4%). Nevertheless, more than 85% of respondents indicate
that they want to access financial services from formal financial institutions.
One restrictive consideration in borrowing money is the lack of collaterals. This can now be
addressed through the Credit Surety Fund, which serves as an alternative security in place of
conventional collaterals.
You will be pleased to know that our CSF program is on the agenda of the APEC summit.
During the APEC SME Financing Forum in Iloilo City last September, one of the key priorities
of the summit is "Fostering SMEs Participation in Regional and Global Markets." One of the
proposals is the promotion of inclusive growth through sustainable and resilient SMEs with
support from the CSF program.
Similarly, the CSF has advocates in Congress who seek to institutionalize the CSF program.
At the Senate, Senator Bam Aquino is its principal author and Congressman Cresente Paez
at the House of Representatives. Their bills were unified during the Bicameral Conference
Committee meeting last month and will be submitted for approval by President Benigno C.
Aquino III.
And so, ladies and gentlemen, the story of our CSF program continues to evolve and
produce positive results for our MSMEs, their owners and their employees.
With Paranaque joining our CSF community, we look forward to generating more benefits
from financial inclusion, this time within Metro Manila.
Congratulations to Paranaque under the leadership of Mayor Olivarez, for taking this major
step forward to empower MSMEs in their city, to help improve lives through entrepreneurship
and in generating jobs in their community.
Maraming salamat sa inyo at Mabuhay po tayong lahat!