P40.6-B loans granted to MSMEs during ECQ period —BSP

A total P40.6 billion in loans were granted by the Philippines' top 30 banks to micro, small and medium enterprises (MSMEs) during the enhanced community quarantine period after the Bangko Sentral ng Pilipinas (BSP) implemented relief measures to aid small-time businesses amid the COVID-19 pandemic.

BSP managing director Lyn Javier reported the development during the meeting of the House Committee on Banks and Financial Intermediaries on Tuesday.

According to Javier, the survey the BSP conducted among the Philippines' top 30 banks, which include the top 10 universal banks, top 10 thrift banks, and top 10 rural banks, showed that these financial institutions have been responsive to the relief measures the BSP has implemented during the health crisis.

"We note that banks continue to generate new MSME loans even during the ECQ. A total of P40.6 billion in loans were granted by these banks during the ECQ," she said.

Aside from providing credit, Javier also said these banks also extended financial relief to MSMEs by amending their financing terms.

"From March to April 2020, P25.6 billion in MSME loan accounts were renewed while P1.8 billion in MSME loan accounts were restructured," she said.

In providing relief measures for MSMEs, Javier noted that the BSP wanted to assist the MSME sector in carrying on with their businesses even during the COVID-19 pandemic and fast-track the recovery and sustainability of their operations post-crisis.

Among the relief measures implemented by the BSP was the implementation of alternative modes of compliance with reserve requirements, where the loans granted to MSMEs are allowed as an alternative mode of compliance with reserve requirements, subject to some conditions.

Javier pointed out that following the implementation of this measure, P71 billion in MSME loans were reported as compliance by 90 banks with the reserve requirements during the reserve week of June 26.

"This is a substantial increase from only P9.9 billion in MSME loans used by 55 banks immediately after the effectivity of the relief measures," she said.

Aside from this, Javier said the BSP also introduced amendments to regulatory capital treatment of exposures to MSME, such as the temporary reduction in credit risk weight of MSME loans, and the assignment of zero percent risk weight for loans covered by guarantees.

The BSP likewise relaxed its "Know-Your-Customer" requirements like the presentation of valid IDs by retail clients in order to facilitate access to formal financing channels and delivery of services, she added.

Javier assured lawmakers that the BSP will continue to monitor the impact of its relief measures as well as market conditions to ensure their readiness to implement needed policies and measures.

"We are one government, we are one Filipino nation, and we at the BSP shall support all efforts to fight this once in a lifetime pandemic and keep the economy afloat," she said.

"The BSP has and is ready to employ the necessary tools in its arsenal to address the impact of COVID-19 while staying true to its mandate," she added. —KBK, GMA News