MANILA, Philippines - The Bangko Sentral ng Pilipinas said it would support the creation of more credit surety funds to help boost businesses in the countryside.
A credit surety fund is a pool of resources, which members of cooperatives in rural areas may tap as collateral when they apply for bank loans.
The BSP said this would ease credit access of individuals and entities that do not have assets to serve as collateral.
The BSP spearheaded the creation of credit surety funds in various parts of the country. Land Bank of the Philippines, Development Bank of the Philippines and local government units have all made contributions to such funds.
Cooperative members may borrow from banks a collective amount equivalent to 10 times the value of the credit surety fund.
Currently, credit surety funds have been established in Cavite, Iloilo and some provinces in Mindanao.
?We support the objective to help farmers and cooperatives in the countryside boost their incomes,? BSP Deputy Governor Diwa Guinigundo said. ?With the credit surety fund, we are able to increase credit access of people in rural areas.?
The BSP earlier said that the establishment of credit surety funds would help perk up lending activities in the provinces, stimulate business and economic activities, create job opportunities and increase local governments? revenues in the form of taxes and fees.
Apart from farm cooperatives, other beneficiaries of credit surety funds are micro, small and medium enterprises.
?The credit surety fund program was conceptualized by the BSP to increase the flow of credit in the countryside and to highlight the significant role of micro, small, and medium enterprises (MSMEs) not only in countryside development but as drivers of the Philippine economy as well,? Guinigundo earlier said.
Together with the promotion of more credit surety funds, the BSP is likewise encouraging banks to lend more to individuals and businesses.
The BSP has been urging banks to lower interest rates on loans to spur borrowings, which are needed to support consumption and investments. Michelle V. Remo
