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PHL banks do not meet credit quotas for small and medium businesses

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PHL banks do not meet credit quotas for small and medium businesses

PHILIPPINE BANKS have failed to comply with the mandatory quotas for small business loans in the FThis was evident from data from the Bangko Sentral ng Pilipinas (BSP).

Loans granted by the banking sector to micro, small and medium enterprises (MSMEs) amounted to EUR 474.922 billion at the end of March.

This constituted only 4.41% of their total loan portfolio of P10.77 trillion, well below the mandatory quota of 10%.

Under Republic Act No. 6977 or the Magna Carta for MSMEs, banks are required to allocate 10% of their total loan portfolio to small businesses. Of this, 8% of loans should be allocated to micro and small enterprises, while 2% should go to medium-sized enterprises.

However, banks have long chosen to impose fines for non-compliance, rather than taking on the risks associated with lending to small businesses.

At the end of March, BSP data showed that lending to micro and small enterprises stood at $191.276 billion, equivalent to just 1.78% of their total loan portfolio and well below the 8% quota.

On the other hand, loans for medium-sized enterprises amounted to P283.646 billion, accounting for 2.63% of their total loan portfolio.

By type of bank, universal and commercial banks provided EUR 122.523 billion in loans to micro and small enterprises in the world. Ffirst quarter. This was only 1.33% of their total loan portfolio.

Large banks’ loans to medium-sized enterprises amounted to 235.213 billion euros, or 2.37% of their total lending.

Savings banks extended loans to micro and small enterprises worth P30.263 billion or 3.4% of their loan portfolio, falling short of quota.

Thrift banks’ loans to medium-sized enterprises reached P28.811 billion, representing 4.61% of their total lending.

Meanwhile, rural and cooperative banks exceeded quotas for lending to SMEs. They provided loans to micro and small enterprises worth P38.49 billion, representing 17.74%.

Their loans to medium-sized enterprises amounted to P19.622 billion or 9.29% of their loan portfolio.

Loans provided by digital banks to the micro and small enterprise sector in the US amounted to £180 million Ffirst quarter, accounting for 1.02% of their loan portfolio.

Digital banks paid 10 million euros to medium-sized companies, equivalent to 0.07% of their portfolio.

During the pandemic, the BSP allowed banks to consider loans from MSMEs as alternative reserve compliance to reserve requirements to help support the sector.

This support measure expired on June 30, 2023. However, it was extended to thrift banks and rural and cooperative banks until December 31, 2025. Luisa Maria Jacinta C. Jocson