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THRIFT
banks want to open letters of credit for small and
medium enterprises (SMEs) to do business overseas.
In a
proposal to the Bangko Sentral ng Pilipinas, the
100-strong Chamber of Thrift Banks said the present
banking laws are preventing them from pursuing business
relationships with the SMEs they have helped to go into
business.
Under
Section 10 of Republic Act 7906, or the Thrift Banks
Act, thrift banks may only open domestic letters of
credit.
“The
present policy does not do justice to the thrift banks
which painstakingly nurture SMEs in their infancy stage
only to lose them to the big banks when the SMEs grow in
size [and] attractive to big players,” the chamber said
in the proposal.
The
chamber said information technology and globalization
gave SMEs the tools to deal directly with customers in
other countries.
“It is,
therefore, but logical for the government to also enable
the thrift banks to compete with the big banks in
providing the necessary import-export facilities to
their SME clients,” the chamber said.
Citing
Section 10 of the Thrift Banks Act, the chamber said the
central bank may allow them to open foreign letters of
credit subject to the criteria or conditions set by the
Monetary Board which may include the following:
experience in foreign-currency deposit units to make
sure they have established some foreign
correspondent-banking relationship; experience or
training in import-export financing; working knowledge
in customs brokerage, as well as import-export duties
and taxes; as well as familiarity with international
trade practices.
A
letter of credit serves as a bank guarantee that its
client will be able to meet its financial obligations. |
