RCBC Opportunity Fund allows movable assets as collateral

The Rizal Commercial Banking Corp. (RCBC) on Tuesday said it has created an Opportunity Fund to finance micro, small, and medium enterprises (MSMEs) and local farmers.

Along with Acudeen Technologies Inc., RCBC is providing MSMEs and farmers access to finance with the use of movable assets as collateral.

“This pioneering initiative promotes innovation by giving all stakeholders the opportunity to offer creative solutions to sustainability challenges, especially in empowering our entrepreneurs in exponentially growing our MSME sector,” said RCBC president and CEO Eugene Acevedo.

Under the fund, RCBC will allow MSMEs and those in the agriculture sector the option to use movable assets such as account receivables, crops, farm equipment, warehouse receipts, bank accounts, and future harvest as collateral.

President Rodrigo Duterte enacted the Personal Property Security Act in August 2018, allowing movable assets as eligible collateral for loan applications to address the lack of real property among many MSMEs.

The pilot will initially cover Acudeen Technologies Inc., a receivables factoring exchange that facilitates buying and selling of SME invoices through its platform.

It will be covered by sovereign guarantee through PhilGuarantee to ensure the quality of underwriting and receivables assets.

“The next immediate step is clear: To get the collateral registry operational as soon as possible. Then, quickly build up a real movable asset finance market with a diversified range of products and with as many players as possible from both banks and non-banks,” said RCBC executive vice president and chief innovation and inclusion officer Lito Villanueva.

“A substantive movables finance market will mean, for example, that at least 30% of all commercial lending in the Philippines involve movable assets,” he said.

According to RCBC, this initiative comes at a time of low capital investment among MSMEs, which account for 3.32% of the Philippine gross domestic product (GDP), while their gross value added (GVA) sits at 35.7%.

MSMEs are reluctant to approach banks due to the lack of collateral and credit history for loan applications.

Last month, RCBC announced plans to put up a virtual digital bank through a rural bank. —Jon Viktor Cabuenas/VDS, GMA News