amando m tetangco, jr : effective lending to smes in the philippines speech by mr amando m tetangco, jr, governor of bangko sentral ng pilipinas ( the central bank of the philippines ), at the launch of the 2012 rcbc sme initiatives, makati city, 16 may 2012. * * * the officers and staff of rcbc under the leadership of president lorenzo tan ; entrepreneurs from the sme sector ; fellow advocates in promoting access to credit ; special guests, good evening. it is my pleasure to join this launch of innovative and customer - friendly initiatives of rcbc... in support of small and medium enterprises : the phone - a - loan service and the women ’ s enterprise loan program. these two programs join the internet - based loan self - assessment service introduced in 2009. indeed, rcbc deserves commendation for these services that enable smes to find out early on – by telephone or internet – if their business fits in … with rcbc ’ s sme initiatives. this is … therefore … a win - win program that saves time... for both the entrepreneurs seeking credit and the bank offering credit. the women ’ s enterprise loan program is also noteworthy for addressing the need of filipina entrepreneurs … not only for credit, … but also for incorporating other financial services, training and business networking. in other words, this program is designed to support the growth of smes managed by filipinas. this is a good decision. in the microfinance world, it has been proven... repeatedly... that women make exceptional entrepreneurs and have good credit discipline. that you are launching the women ’ s enterprise loan program on the week of the celebration of mother ’ s day … makes your program even more meaningful. ladies and gentlemen. we need our financial system to reach out to underserved and the presently unserved. together, we should work on having an inclusive financial system that brings about inclusive growth … in our country. this is the value of your sme program. as it is, the 2010 financial access survey indicated that only around 20 % of our small firms access loans from financial institutions. the figure is higher in our neighboring countries ; in malaysia, for instance, the comparable figure is 60 %. the impact of micro, small and medium enterprises on our economy and our people cannot be overemphasized. together, our msmes are estimated to employ roughly 61 % of filipino

to illustrate that, in the context of policy making, challenges and achievements are more closely interrelated than we think. as a central banker of over four decades, i have witnessed how significant economic and financial challenges / changes served to catalyze crucial and progressive reforms. stepping up to the challenges – banking sector : a case in point is the 1997 – 98 asian financial crisis ( afc ) that revealed vulnerabilities in the philippine financial system. the recognition of these weaknesses firmed up our resolve to formulate measures and implement reforms to address these concerns. the afc also highlighted the importance of reducing currency and maturity mismatches through the creation of a fully developed capital market. this triggered a whole slew of market reforms that included the development of “ organized markets ”, where transparency, price discovery, and more reliable benchmarks are essential elements. 1 / 4 bis central bankers'speeches then in 2007, we witnessed the outbreak of what eventually evolved into the worst financial crisis the modern world has witnessed. international financial institutions weighed down by bad debts collapsed or had to be supported by their governments to keep credit flowing to credit - starved economies. notwithstanding, the global recession that ensued was the worst since the great depression. in contrast, the philippine economy continued to grow through the global financial crisis ( gfc ) with our banking sector remaining sound, stable and liquid. indeed, this performance can be attributed to the crucial reforms that had been put in place earlier. in the aftermath of the gfc, the bsp is unrelenting in its pursuit of an even broader reform agenda aimed at further strengthening the philippine banking industry in terms of capitalization, risk management, and corporate governance. clearly, the bsp has provided the regulatory framework. in response, the banking industry stepped up the plate and aligned their standards with international best practices. in other words, the synergy worked! thus, even in the face of lingering uncertainties overseas, the domestic banking system has maintained a remarkable growth momentum. as of december 2016, total resources and deposits of the banking system have reached historic high levels ( p13. 8 trillion in resources which increased further in q1 this year and deposits of over p10 trillion ). this allowed bank lending to continue to expand by double - digit rates, most of which financed productive sectors. in addition, asset quality continues to improve with npl ratio of universal and commercial banks dropping to less than 2 % in december 2016, even better than the pre - asian financial crisis levels.