CDA Calls on Private Banks Support for Collateral-Free Loans Thru CSF Program

After a successful forum with cooperative banks in March, the Credit Surety Fund Service (CSFS) recently held a dialogue with two of the country’s leading commercial banks – the Bank of Commerce (BOC) and Rizal Commercial Banking Corporation (RCBC) to expand the collateral-free loan facility offered under the CSF program to micro, small and medium enterprises (MSMEs) through the private banks.

Conducted on April 18, 2023 at CDA head office, the activity was facilitated by the Technical Assistance Division (TAD) of the CSFS and was graced by CDA Chairman Undersecretary Joseph B. Encabo. Deputy Administrator Atty. Ma. Lourdes P. Pacao led the CSFS team together with Acting Director Joselito O. Hallazgo and TAD Chief Recto E. Transfiguracion.

Present in the forum were officers from BOC Messrs. Darryl Yee, Ronald Castillo, Juan Miguel Gonzales and Mesdames Hemie Gozalo, and Ruby Mariano. RCBC was represented by Mr. Philip Basmayor and Mesdames Carissa Dawn Diomampo and Rusette Elinore Singh. The event was likewise attended by Bangko Sentral ng Pilipinas (BSP) Financial Inclusion Office (FIO) Manager Ms. Eleanor Ramos who joined thru virtual platform and Cooperative Project Development Assistance Division Chief Ms. Melissa C. Santos and her Team.

The CSFS officials and BSP’s Ms. Ramos acted as resource persons during the half-day activity.

In his speech, Chair Encabo said “CSF is a platform that we could build a good program, activities, and services for them (the MSMEs).  He added that as a whole of nation approach toward financial inclusion, CSF cooperative is a new opportunity for the banking sector that will boost the potential for growth and economic sustainability of the country.

The CSF is a credit innovation of the BSP that provides access to loans to micro, small and medium enterprises (MSMEs) including cooperatives without the need for collaterals which discourages most MSMEs from transacting with banks. By virtue of the CSF Act of 2015 (R.A. 10744), CDA takes charge of the registration, monitoring, and supervision of CSF Cooperatives. BSP on the other hand spearheads the promotion, organization and capacity-building of  CSF cooperatives. There are now  thirty-three (33) registered CSF cooperatives in the country.

Currently, the Land Bank of the Philippines (LBP) and the Development Bank of the Philippines (DBP) are the participating Government Financial Institutions (GFIs) which are contributors to registered CFS Cooperatives (CSFCs) in the country since it was launched by the Bangko Sentral ng Pilipinas (BSP) in 2009. However, private banks are also encouraged to participate as lending banks to expand the options for MSMEs where they can avail of affordable credit.

Some of the questions raised during the open forum were – (1) How can a private bank compete with government banks that offer a lower interest rate; (2) Which creditor is given priority in the collection of payments in case of default; (3) How to treat delinquency rate of BSP organized CSF and CSF cooperative registered with CDA; (4) Possibility of requiring a collateralized loan from debtors, among others. The resource persons responded to the queries and provided inputs in addition to their respective presentations.

CDA Chair Joseph B.  Encabo and CSFS team with RCBC GROUP
CDA Chair Joseph  B. Encabo and CSFS team with Bank of Commerce Group