BANKS are extending more loans to micro, small and medium enterprises (MSMEs) and big companies to help them cope with the ongoing crisis, the central bank said on Tuesday.

In a statement, the Bangko Sentral ng Pilipinas (BSP) said loans issued to MSMEs and large enterprises have risen after banks were allowed to consider these as compliance with their reserve requirements.

Citing preliminary data, the BSP said 97 banks disbursed loans to MSMEs for the week ending July 23, driving up the reserve requirement balance from MSME loans to an average of P84.2 billion. This was more than seven times the P9.9-billion average daily balance of MSME loans used by 55 banks as alternative compliance with the reserve requirement as of end-April.

“This indicates that banks have continued to grant new loans or refinance existing ones to MSMEs and large enterprises even through the quarantine,” BSP Governor Benjamin E. Diokno said in a statement.

Last month, Mr. Diokno said loans to MSMEs that were used as reserve compliance stood at around P71 billion.

Meanwhile, 13 lenders lent to large enterprises as part of reserve compliance with an average daily loan balance of P12.3 billion as of the week ending July 23. This is a significant jump from the P376-million average daily loan balance to large enterprises used by 12 banks for the reserve week ending June 4 when the measure became effective.

“We see this contributing positively to whole-of-nation efforts to mitigate the economic impact of the health crisis,” Mr. Diokno said.

The central bank has allowed loans to large enterprises and MSMEs to be considered as banks’ alternative reserve compliance until end-2022, to help companies affected by the coronavirus disease 2019 (COVID-19) pandemic.

MSMEs make up about 99.5% of business establishments in the country.

BSP has also lowered the credit risk weight for loans disbursed to MSMEs and approved the assignment of zero-risk weight for loans to the sector that are guaranteed by the Philippine Guarantee Corp., Agricultural Guarantee Fund Pool and the Agricultural Credit Policy Council.

Based on Republic Act 6977 or the Magna Carta for MSMEs, banks must disburse 10% of their total loanable funds to MSMEs.

However, BSP data showed credit to MSMEs in 2019 only reached P579.13 billion or 7.1% of the P8.14 trillion worth of banks’ total loanable funds. — Luz Wendy T. Noble

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