THE two entities formalize the implementation of Republic Act No. 1074. — BW FILE PHOTO

THE Bangko Sentral ng Pilipinas (BSP) partnered with the Cooperative Development Authority (CDA) to implement the Credit Surety Fund (CSF) Cooperative Act of 2015 in a move that could pave the way for sustainable financing for small businesses.

The CSF takes the place of hard collateral for loans extended to qualified cooperative and micro-, small-, and medium-sized enterprises (MSMEs).

“The BSP is committed to support the development of the CSF as a vital credit infrastructure for sustainable MSME financing,” BSP Governor Benjamin E. Diokno said in a statement.

The two entities inked the memorandum of agreement last month to formalize the implementation of Republic Act No. 10744.

The CSF fund is generated primarily from the contributions of well-capitalized cooperatives and local government units, as well as government financial institutions such as the Development Bank of the Philippines, Land Bank of the Philippines, and the Philippine Guarantee Corp.

There are 55 CSFs across the country, of which 14 are registered as cooperatives while the rest have pending registration processes with the CDA.

“Having a shared responsibility under the CSF law, the [agreement] clearly spells out the respective roles and responsibilities of the parties for a proper and effective implementation of the law and the implementing rules and regulations,” CDA Chairman Orlando R. Ravanera said in a statement.

Based on the law, the CDA is the lead implementer for the registration regulation, monitoring and supervision of CSF cooperatives.

Meanwhile, the BSP is expected to spearhead the promotion; creation and organizational development of CSF cooperatives; facilitate acquisition by CSF cooperatives of technical assistance; and assist the CDA in setting the criteria and qualifications for CSF cooperatives.

Among the hurdles faced by MSMEs when it comes to financing are collateral requirements. The BSP is also exploring putting up a supply chain financing scheme that will include an electronic platform where MSMEs can leverage the credit profile of their major customers that are larger firms to avail loans. — Luz Wendy T. Noble