THE Bangko Sentral ng Pilipinas (BSP) and the Cooperative Development Authority (CDA) have entered into a memorandum of agreement (MOA) to address the challenges faced by micro, small, and medium enterprises (MSMEs) and their cooperatives in accessing bank financing due to lack of collateral and credit history.
The agreement was signed in March 2021, formalizing the agencies’ cooperation arrangements under Republic Act 10744 or the “Credit Surety Fund (CSF) Cooperative Act of 2015.”
“The BSP is committed to support the development of the CSF as a vital credit infrastructure for sustainable MSME financing. Our partnership with the CDA aims to harness collaborative efforts toward our shared goal of empowering cooperatives and MSMEs through the CSF,” BSP Gov. Benjamin Diokno said in a statement.
The CSF is a credit enhancement mechanism that will be managed and administered by a CSF cooperative.
The CSF fund is generated primarily from the contributions of well-capitalized cooperatives and local government units, as well as government financial institutions such as the Development Bank of the Philippines, Land Bank of the Philippines and the Philippine Guarantee Corp.
It also serves as a security in lieu of hard collateral for loans extended to qualified cooperative and MSME borrowers.
There are about 55 CSFs established in the country, 14 of which were already registered as cooperatives with the CDA while others are in the process of registration.
“The MOA between the CDA and the BSP manifests a strong convergence between the two agencies with the end in view of empowering MSMEs and cooperatives. Having a shared responsibility under the CSF law, the MOA clearly spells out the respective roles and responsibilities of the parties for a proper and effective implementation of the law and the IRR,” CDA chairman Orlando Ravanera said. (JOB)