BSP opens 3rd credit surety fund in Bohol

By Kit Bagaipo


Tagbilaran City , BOHOL - -



Finding the right formula to fuel the growth of micro, small and medium enterprises (MSMEs) where 70-percent of the country’s workforce depend, the Bangko Sentral ng Pilipinas (BSP) launched on Sunday the third and biggest cooperative credit surety fund here.



With an initial membership of 18 cooperatives that pooled its fund resources with a counterpart of P5-million each from the provincial government, the Development Bank of the Philippines (DBP) and the International Loan Guarantee Fund (IGLF), the Bohol Coopreneurs Credit Surety Fund (BC-CSF) seeks to expand and simplify access to credit among member-cooperatives.



BSP Governor Amando Tetangco Jr. and Monetary Board Members Juanita Amatong and Ignacio Bunye signed the memorandum of agreement (MOA) formally creating the BC-CSF with Bohol Governor Erico Aumentado, Vice Governor Julius Caesar Herrera, Development Bank of the Philippines (DBP) president Reynaldo David and cooperative representatives at the Bohol Beach Club in Panglao Island.



A brainchild of the BSP, the credit surety fund or CSF is a program that involves the creation of a trust fund contributed by cooperatives from a province and its provincial government intended primarily to make MSMEs (that are relying on cooperative fund support) bankable by giving them access to formal sources of financing by means of a surety cover.



“In effect, MSMEs who cannot get financing due to the absence of collaterals can now do so using the surety cover as substitute through their respective cooperatives,” Tetangco said in his speech during the MOA signing.



“As most of the country’s workers belong to the MSME sector, we can look forward to a sustained growth in the economy despite the global crisis,” the BSP official stressed.



Bohol Poverty Reduction Management Office head Antonieto Pernia said the BC-CSF membership will reach 30 cooperatives before the end of the first quarter with a P20-million collective fund.



The central bank first introduced the CSF concept in the province of Cavite with the launching of the Cavite Coopreneurs Surety Fund back in August 2008 followed by the Aurora Province Coopreneurs Surety Fund last January.



“The BC-CSF is the first credit surety fund to be organized outside of Luzon and boasts of having the shortest gestation from conceptualization to actual launch,” claims Gov. Aumentado in his speech.



The CSF program received overwhelming reception from cooperatives from both Cavite and Aurora Province as it opened a wider source of financing for their member MSMEs.



DBP president David said the credit surety fund is a welcome development for the banking sector as the program makes it more comfortable for them to lend even in the absence of collaterals.



Even with the government’s requisite that banks and lending institutions allocate 10-percent of its loan portfolio to MSMEs, the sector still finds it difficult to obtain loans due to lack of acceptable collaterals, unstable income or cash flows, lack of business experience or track record and low paying capacity.



“This is the right formula and effective tool for countryside development - by energizing cooperatives to become agents of progress in its own communities by creating more jobs and livelihood,” adds David.



Adelia Ajoc of the Carmen Credit Cooperative Inc. said that through the credit surety fund, their need for additional capital is addressed while it is now much easier for their cooperative to extend loans to members for livelihood without resorting to usurers and loan sharks.



“Our cooperatives are small but we look forward to becoming partners in the development of MSMEs with the guidance of the central bank and the banking sector,” says Dr. Cerina Bolos, chair of the BC-CSF oversight committee.



According to Aumentado, the launching of the BC-CSF is a “defining moment for Bohol which once belonged to the ‘Club 20’ of poorest provinces in the country and a hotbed of the communist insurgency”.



“This will further bolster the province’s growth with our food sufficiency hitting a record of 113-percent,” the governor said.



The central bank hopes to cascade the CSF concept to all key areas of the country.