Bill on mandatory lending for MSMEs filed

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A MEASURE expanding the mandatory credit to micro, small, and medium enterprises (MSMEs) and imposing stiffer penalties on noncompliant lending institutions has been filed in the Senate.

Under Senate Bill No. 110, Senate Majority Leader Juan Miguel F. Zubiri also proposed to amend Republic Act No. 6977 or the “Magna Carta for Small Enterprises” by expanding the coverage of micro enterprises.

Mr. Zubiri said in the explanatory note that the measure intends to give MSMEs more access to financing to allow them “truly dynamic, resilient, and globally competitive.”

“Lack of access to financing, sustainable markets and training to acquire the needed mindset and skills to ultimately grow and sustain a business are just a few of the constraints faced by MSMEs,” he said.

The bill, among others, mandates lending institutions to set aside at least ten percent of their total loan portfolio for MSMEs from the current six percent for a period of ten years.

It however provided that medium enterprises shall receive only up to two percent of the mandatory allocation.

The measure also proposed to define micro enterprises as those whose total assets are worth up to P5 million from the current P3 million or less and small enterprises as those with total assets worth over P5 million up to P15 million.

The bill also proposes to increase the penalties imposed on banks and other lending institutions for failure to comply with the credit quota to a fine ranging from P500,000 to P5 million for larger banks.

Smaller banks, meanwhile, will face a fine of not less than P100,000.

At present, the Bangko Sentral ng Pilipinas is only allowed to impose administrative sanctions, a fine of not less than P500,000 and imprisonment of up to six months. — C.A. Tadalan