MANILA – Speaker Alan Peter Cayetano has urged the government and private banks to provide easier loan access to micro, small, and medium-scale enterprises (MSMEs) and farmers, whose livelihoods were affected by the coronavirus disease (Covid-19) pandemic.
During the virtual hearing of the House Defeat Covid-19 Committee on Tuesday, Cayetano said the problem of the country’s financial system is how to get potential small borrowers to avail themselves of loans from the banking sector.
He noted that small borrowers are “intimidated” by the formal banking system.
“How do we get people not to borrow from 5/6 lenders who charge very high-interest rates and go to you? Even farmers with land titles who apply for small loans are told the application/approval process is very tedious. They are being dissuaded,” he said.
Cayetano recommended to simplify and shorten the loan application procedures, as well as reduce the documentary requirements.
“The purpose is to help people but at the same time keep the financial institutions healthy,” he said.
Land Bank president Cecilia Borromeo, who was present during the hearing, stressed the need to strike a good balance of maintaining prudence and the other due diligence processes before lending out “precious government funds.”
“We did it in the case of the PHP15,000-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 the 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.
Bangkok Sentral ng Pilipinas (BSP) Governor Benjamin Diokno, meanwhile, said the central bank has eased the requirement for banks to set aside a portion of their funds as reserves.
“We have freed up from PHP180 billion to PHP200 billion and we asked banks to lend the money to MSMEs,” he said.
Finance Secretary Carlos 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.
Cayetano vowed to fast-track the approval of a stimulus bill seeking to mitigate the impact of the pandemic on the Philippine economy.
“While waiting for the administration version of the stimulus package, we are already hearing through this TWG (technical working group) the draft bill. We will fast-track all of this, much better if the Palace will certify this [as urgent] like the Bayanihan to Heal as One Act,” Cayetano said.
The draft consolidated bill called Philippine Economic Recovery Act proposes a total allocation of PHP613 billion to fund the economic interventions aimed at protecting Filipino families and jobs; assisting workers and business entities facing hardship due to the pandemic, and preserving the country’s trajectory to economic prosperity. (PNA)