BSP to formally launch scheme to enhance credit in Dinagat Island

THE establishment of the Dinagat Island Credit Surety Fund (CSF) is set to begin with the signing of a memorandum of agreement (MOA) on Tuesday.

A statement by the Bangko Sentral ng Pilipinas (BSP) said the MOA would be signed by Monetary Board Member V. Bruce J. Tolentino and Dinagat Island Provincial Gov. Glenda B. Ecleo.

The BSP said two more CSFs are expected to be launched before the year ends: one in the province of Ifugao and the other in the city of Tacurong, Sultan Kudarat.

The BSP considers the signing of the MOA on September 11 as a milestone in Dinagat Island as it’s the first in the Caraga region (comprised of the provinces of Agusan del Norte, Agusan del Sur, Surigao del Norte, Surigao del Sur and Dinagat Island).

Initiated by the BSP in August 2008, the CSF is a credit-enhancement scheme designed to increase the creditworthiness of cooperatives, businessmen and micro, small and medium enterprises (MSMEs) that are encountering difficulties in getting access to bank credit due to lack of acceptable collaterals and credit information.

The CSF pools cash contributions from participating cooperatives, local government units and partner institutions, which will then serve as security for loans extended by banks to MSMEs in lieu of acceptable collaterals.

The BSP added that as of August 16, cooperatives pledged to contribute an aggregate amount of P2.1 million to the Dinagat Island CSF. The provincial government has initially pledged P3 million. The Development Bank of the Philippines and Land Bank of the Philippines are also expected to put up their counterpart contributions to the Dinagat Island CSF. The CSF Program has been established in 32 provinces and 20 cities nationwide.

Meanwhile, the rural banking industry posted growth as of end-March, with the industry’s assets expanding by 8.3 percent to P216.7 billion funded by the 6.7-percent growth in deposits, which has reached P154.8 billion.

Industry capital adequacy ratio stood high at 19.1 percent, return on equity stood at 7.1 percent, while annualized net profit was reported at P2.9 billion at end-March 2018, according to the BSP.

Rural banks continue to support countryside development and growth of retail banking through financing of rural communities.

The BSP said the industry outlook of rural banks remains positive.

Based on the preliminary results of the Banking Sector Outlook Survey, the top 3 strategic priorities of the rural banks over the next two years are to grow the business, protect the bank and to optimize available technology.

These strategies are expected to enable rural banks to provide a wide range of innovative financial products and services appropriate to the needs of the local communities.

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Rea Cu is a graduate of Assumption College-Makati with a Bachelor's degree in Communications. She majored in Advertising and is currently the finance reporter of the BusinessMirror.