BSP and CDA sign agreement to boost funding for MSMEs
THE Bangko Sentral ng Pilipinas (BSP) and the Cooperative Development Authority (CDA) have entered into a Memorandum of Understanding (MOA) to address the challenges that micro, small and medium enterprises (MSMEs) and their cooperatives face in accessing finance bank due to lack of collateral and credit history.
The agreement was signed in March 2021, formalizing agency cooperation agreements under Republic Act 10744 or the Credit Guarantee Fund (CSF) Act 2015.
“The BSP is committed to supporting the development of the CSF as a vital credit infrastructure for the sustainable financing of MSMEs. Our partnership with CDA aims to mobilize collaborative efforts towards our common goal of empowering cooperatives and MSMEs through the CSF, ”BSP Governor Benjamin Diokno said in a statement.
The CSF is a credit enhancement mechanism that will be managed and administered by a cooperative of the CSF.
The CSF fund is generated primarily through contributions from well-capitalized cooperatives and local government units, as well as government financial institutions such as the Development Bank of the Philippines, the Land Bank of the Philippines, and the Philippine Guarantee Corp.
It also serves as collateral instead of firm collateral for loans to qualified cooperatives and MSME borrowers.
There are around 55 CSFs established in the country, of which 14 were already registered as cooperatives with CDA while others are in the process of being registered.
“The MOA between CDA and BSP shows strong convergence between the two agencies with the aim of empowering MSMEs and cooperatives. Having shared responsibility under the CSF law, the MOA clearly spells out the respective roles and responsibilities of the parties for proper and effective implementation of the law and the TRI, ”said CDA President Orlando Ravanera. (JOB)