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Central bank, JICA unveil database to help evaluate SME credit risk

THE Bangko Sentral ng Pilipinas (BSP) and the Japan International Cooperation Agency (JICA) announced the list of banking participants for a credit risk database project intended to facilitate lending decisions for small businesses.

“The project aims to improve access to finance among SMEs (small and medium enterprises) by promoting risk-based lending which uses credit scoring models to assess the capacity of SMEs to repay their loans,” BSP Governor Benjamin E. Diokno said at the virtual launch of the project.

The BSP said 17 banks participated in the project — Land Bank of the Philippines, Development Bank of the Philippines, Security Bank Corp., Rizal Commercial Banking Corp., Philippine Business Bank, Sterling Bank of Asia, China Bank Savings, Malayan Bank, Philippine Savings Bank, UCPB Savings Bank, Producers Savings Bank, Queen City Development Bank, Wealth Development Bank Corp., Sun Savings Bank, AllBank, Inc., CARD SME Bank, Inc. and First Consolidated Bank.

Chamber of Thrift Banks President Cecilio D. San Pedro said the data collection for the project has started. Meanwhile, the scoring model and the service will launch by July 2021, he added.

“We all know that one of the main issues for MSMEs (micro-, small-, and medium-sized enterprises) is funding, which is primarily because of the difficulty faced by MSMEs to prepare sufficient information for loan appraisals, making it tough for financial institutions to evaluate credit,” Mr. San Pedro said.

In the first quarter, banks lent P208.201 billion to the MSME sector, about 2.47% of their total loan portfolio. This is below the 10% share required by Republic Act No. 6977 or the Magna Carta for MSMEs.

BSP Center for Learning and Inclusion Advocacy Ellen Joyce L. Suficiencia said the database will be a three-year project ending in 2022 that will be turned over to a permanent body — an industry association, a government agency or the BSP.

MSMEs made up about 99% of registered businesses in the Philippines as of 2018, according to the Department of Trade and Industry.

“Clearly, both the government and private sector should support MSMEs to help them withstand this crisis and eventually recover and thrive beyond this pandemic,” Mr. Diokno said. — Luz Wendy T. Noble

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