Banks allocate P242-B new MSME loans – Manila Bulletin

Banks allocate P242-B new MSME loans – Manila Bulletin
Written by Publishing Team

Banks issued EGP 241.7 billion in new loans to micro, small and medium enterprises as an alternative compliance with the Reserve Requirements Rule (RR).

This amount represents 16 percent of total required reserves as of the first reserve week in December 2021, based on Bangko Sentral ng Pilipinas (BSP) data.

Bank loans to large institutions used as an alternative commitment to reserve requirements amounted to 37.9 billion pesos during the same reserve week, according to the Credit Facility Bank. This is 2.5 percent of the total required reserves

Billing Settlement Payment (BSP), as part of relief measures to deal with the effects of COVID-19, has allowed the use of loans to MSMEs and large enterprises as an alternative RR compliance against deposit obligations and deposit alternatives. The relief procedure will continue until the end of 2022.

MSMEs that use non-monetary solutions

Both amounts remain conservative since the Billing Settlement Payment (BSP) set a cap of $300 billion for MSMEs and PHP425 billion for large enterprises.

BSP Governor Benjamin E. Diokno said the limits are calibrated based on various simulations and are intended to ensure that the use of loans as an alternative method of compliance is in line with local liquidity conditions and projected growth.

While Billing Settlement Payment (BSP) allowed the use of loans to MSMEs and large enterprises as an alternative RR compliance until December 29 this year, the BSP said it may be “subject to early closure” if warranted.

After 2022, the Billing Settlement Payment Program (BSP) will close the window for eligibility to use these relief measures.

To ensure continued support for MSMEs, Bill Settlement Payment (BSP) encouraged banks to take advantage of other sources or alternative data such as social media and online transactions to score credit, not just traditional bank accounts.

The central bank said that unlike traditional means such as bank transaction data and credit bureau information, surrogate data comes in several forms including social media, mobile data, utility data, behavioral data, online transactions, geolocation data, and browser data, among others. .

BSP said creditworthiness forecasting “is a promising use case for alternative data” especially for MSMEs. Based on a quick survey conducted in September 2021, the use of alternative data is expected to result in better customer ratings, better pricing of loan products, and default rates, according to the Credit Facility Bank.

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