Rules on personal property as loan collateral to be signed before end-2018

The implementing rules and regulations (IRR) of the Personal Property Security Act is expected to be ready before the year ends, the Department of Finance (DOF) said Monday.

“The IRR is at the final stages of completion ... The target is to have the IRR finalized and signed before the end of the year. Earlier if possible,” Finance Undersecretary Gil Beltran told reporters in Pasay City.

The Personal Property Security Act or Republic Act 11057 was signed into law by President Rodrigo Duterte last August.

RA 11057 enables access to credit by allowing borrowers use movable assets as eligible collateral. It is part of efforts to address the lack of real property under the name of many MSMEs.

Movable assets include machinery, accounts receivables, inventories, livestock, and household inventories.

“There are no major issues involved. It’s just that we have to make sure that we get the best IRR before we start having it approved by the higher authorities,” Beltran said on the sidelines of the Financial Infrastructure Development Network (FIDN) Conference.

Lending for MSMEs will  get a boost once the law is implemented, according to the Bangko Sentral ng Pilipinas (BSP).

“We expect that it will increase it [lending to MSMEs] because there’s now facilitation of access,” said BSP Managing Director Prudence Angelita Kasala said.

“We intend that the IRR will capture all the possible personal property that is secured by this act so that is why it is taking this time,” she said.

MSMEs account for about 66 percent of the total jobs in the country, and 99.6 percent of all businesses registered with the Department of Trade and Industry (DTI).

“The law bears huge potential to accelerate the growth of MSMEs,” Finance Secretary Carlos Dominguez III said in a separate statement.

“Its effective implementation will make a big leap to sustainable, robust, and a truly inclusive economic growth,” he added.

BSP Deputy Governor Chuchi Fonacier noted the central bank is all for the implementation of RA 11057 because of its obvious benefits to the MSMEs sector.

“The BSP strongly supports game-changing reforms in the area of credit access and shall continue to provide an enabling regulatory environment for businesses, especially MSMEs, to flourish,” she said. —VDS, GMA News