SPEAKER Alan Peter Cayetano is urging government and private banks to provide loans to micro, small and medium-scale enterprises (MSMEs) and farmers impacted by the coronavirus disease or COVID-19 pandemic.
Cayetano said the purpose is to help small businessmen and farmers and at the same time keep the financial institutions healthy.
The Speaker said the financial system’s problem is how to get potential small borrowers take advantage of loans from the banking sector.
“How do we get people not to borrow from 5/6 lenders who charge very high interest rates and go to you?” he asked government and private banks.
The House leader raised the idea during the hearing of the special committee for COVID response.
The resource persons included Finance Secretary Carlos Dominguez, Gov. Benjamin Diokno of the Bangko Sentral ng Pilipinas (BSP), Land Bank president Cecilia Borromeo, and Government Service Insurance System general manager Rolando Macasaet.
Cayetano said small borrowers “are intimidated by the formal banking system.”
“Even farmers with land titles who apply for small loans are told the application/approval process is very tedious. They are being dissuaded,” he added.
He suggested to Dominguez, Diokno, Borromeo, and Macasaet to simplify and shorten lending process, and to reduce documentary requirements
“But of course without affecting your financial institutions. We do understand that,” he told them.
In response, Borromeo, whose primary mandate is to lend to farmers, market vendors and other small borrowers, said, “Yes, we can strike a good balance of maintaining prudence and the other due diligence processes that we need to undertake before we lend out precious government funds.”
“We did it in the case of the P15,000 loan to farmers, We trimmed down the requirements and shortened the process. One key success factor was that we had a list of beneficiaries identified by Department of Agriculture. So we can do it in the case of small and medium-scale enterprises. We will continue to look for solutions,” she said.
Diokno said the BSP has eased the requirement for banks to set aside a portion of their funds as reserves.
“We have freed up from P180 billion to P200 billion and we asked banks to lend the money to MSMEs,” he said.
Dominguez said the government, through the Philippine Export and Foreign Loan Guarantee Corp., would guarantee a large portion of the loans banks extend to MSMEs to boost lending to small borrowers.
For his part, Macasaet said GSIS is offering loans of up to P500,000 to its members payable over six years at an annual interest rate of six percent
“We have already released over P100 billion to 250,000 members,” he said.