A LAWMAKER has refiled the bill seeking to allocate P10 billion to state-run banks to allow them to ramp up lending to small businesses affected by the pandemic.

House Bill 1, or the refiled version of the proposed Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery (GUIDE) Act, seeks to give state-run Land Bank of the Philippines (LANDBANK) and Development Bank of the Philippines (DBP) more funds to expand their loan programs for micro, small and medium enterprises (MSMEs) heavily affected by the pandemic.

Under the measure, LANDBANK and DBP would be given P7.5 billion and P2.5 billion, respectively, appropriated from the National Treasury, to boost their unified initiatives.

“The proposed legislative measure seeks to strengthen the capacity of the Land Bank of the Philippines and the Development Bank of the Philippines to provide the needed assistance to micro, small, and medium enterprises, and other strategically important companies,” Leyte Rep. Martin G. Romualdez, the presumptive House speaker, said in the bill.

“To this end, the government financial institutions are mandated to expand their credit programs in order to assist MSMEs to meet their liquidity needs,” he added. “In particular, the LBP and DBP are mandated to expand their credit and rediscounting facilities to affected MSMEs in the agriculture, infrastructure, manufacturing, and service industries.”

The bill was filed by former Rep. Junie E. Cua, who chaired the House Committee on Banks and Financial Intermediaries, in the 18th Congress. It was approved by the House, but failed to hurdle the Senate. This refiled bill is the version approved by the House.

The proposed law increases the capital stock of DBP to P100 billion from P35 billion, which can be hiked further via presidential approval.

The measure also authorizes LANDBANK and DBP to invest in or enter into a joint venture agreement with a special holding company to rehabilitate Strategically Important Companies (SICs).

SICs should be investee companies that have high economic returns or job generation potential in industries such as construction, education, food industry, healthcare, infrastructure, low-cost and socialized housing, manufacturing, power and energy, product distributor/retailer, services, tourism and hospitality, transportation and logistics, and water and sanitation.

The special holding company will be allowed to invest in equity, execute convertible loans or purchase convertible bonds or other securities in said SICs, as well as incorporate subsidiaries.

The private sector may be invited to invest in the special holding company. However, the state-run banks must maintain majority ownership of the special firm until they have recovered their investment.

“The special holding company is intended to be a major player in the financial and capital markets by providing aid to strategically important companies with solvency or liquidity issues brought about by COVID-19 pandemic,” the lawmaker said.

The holding firm will be governed by a board of directors headed by the Finance chief as chairperson.

The measure also grants some tax exemptions to the two government banks and the holding company. — Alyssa Nicole O. Tan