Banks’ MSME loans drop to P199 B (Sabong News)
Author
Lee C. Chipongian
Date
APRIL 25 2022
Banks’ lending to micro, small and medium enterprises (MSMEs) as alternative compliance with the reserve requirements (RR) continued to decline as of mid-March to P198.9 billion.
Based on Bangko Sentral ng Pilipinas (BSP) data, MSME loans as RR compliance has been declining since January.
The P198.9 billion MSME loans is 17.7 percent lower from mid-week of December 2021 of P241.7 billion. MSME loans as RR compliance dipped to P205.7 billion in mid-February from the previous month’s P235.8 billion.
The BSP allowed banks to use loans to MSMEs and large enterprises that are not affiliated with conglomerates as alternative compliance with the RR against deposit liabilities and deposit substitutes.
This regulatory relief measure was first granted in March 2020 to ensure banks will continue to support MSMEs during the long lockdown periods. The BSP will allow the use of loans to MSMEs and large enterprises as alternative compliance with the RR until the end of 2022.
As of mid-March, the new loans to MSMEs as alternative compliance to the RR accounted for 12.8 percent of total required reserves during the period.
Loans to large enterprises, meantime, amounted to P67.4 billion as of mid-March, higher than same time in February of P65.2 billion and from January’s P26.6 billion.
The mid-March loans to large enterprises as RR alternative compliance accounted for 4.3 percent of total required reserves during the period.
The utilization of loans as RR compliance is still low, however. The BSP has set a limit of P300 billion for MSMEs and P425 billion for large enterprises.
Banks have an existing mandatory credit allocation of eight percent of their loanable funds for micro and small enterprises and two percent for medium enterprises under Republic Act No. 6977 for the development of the small and medium scale enterprises.
Based on BSP data as of end-2021, banks’ compliance was only 2.08 percent for micro and small enterprises. This translates to P178.14 billion loans for micro and small enterprises when banks should have loaned P685.60 billion.
However banks had a 3.33 percent compliance rate for medium enterprises, more than the required two percent, releasing P284.99 billion last year versus minimum required of P171.42 billion.
RA No. 9501 or the Magna Carta for MSMEs is the updated version of RA No. 6977 which was enacted in 1991 and amended by RA No. 8289 in 1997, and further amended in 2008 as RA No. 9501.
