The state-owned Development Bank of the Philippines and the Cooperative Development Authority have signed a memorandum of agreement to strengthen cooperative enterprises in the country through improved access to bank financing opportunities and capacity building initiatives.
DBP president and chief executive officer, Emmanuel Herbosa, said the bank’s partnership with CDA allows access to the bank’s credit programs, as well as to training programs on financial and operational management.
“DBP is pleased to partner with CDA in this initiative as we could efficiently further reach out to more cooperative enterprises in the country that need both financing opportunities and mentoring support,” Herbosa said.
DBP is the sixth-largest bank in the country, in terms of assets, and provides credit support to four strategic sectors of the economy – infrastructure and logistics, micro, small and medium enterprises, the environment, and social services and community development.
CDA is the lead government agency responsible for promoting the sustained growth and full development of cooperatives around the country.
Based on the latest government data, there are an estimated 18,065 cooperatives registered with the CDA.
Under the agreement, Herbosa said DBP shall offer financing assistance to eligible cooperatives initially under three programs – the Expanded Rice Credit Assistance Under Rice Competitiveness Enhancement Fund, the DBP Response to Accelerate MSME Recovery, and the DA-Agricultural Credit Policy Council-DBP BuyANIhan credit program.
He said CDA shall help DBP identify cooperatives that are ready to apply for the bank’s financing assistance to ensure project viability and sustainability.
“DBP recognizes our cooperative enterprises as drivers of countryside development. Thus, it is our aim to reach out to them, with the ultimate goal of improving the livelihood of our cooperative-members as they strive to recover from the ill-effects of the pandemic,” Herbosa said.
The ERCA-RCEF is a credit facility to support rice farmers and their cooperatives, while the DBP Response-MSME Recovery seeks to accelerate the recovery of MSMEs amid the economic slowdown caused largely by the pandemic.
The BuyANIhan credit program aims to elevate direct engagement of rice cooperatives in the industry value chain by providing credit access to working capital requirements.
Meanwhile, small businesses continue to gain access to financing from banks, especially after the Bangko Sentral ng Pilipinas used borrowings to the sector as alternative compliance to reserve requirements.
BSP data show that, as of July 29, banks extended a total of 188.7 billion to MSMEs, way higher than the P8.7 billion, as of end-April 2020.
“These numbers suggest that banks continue to extend financial relief to borrowers during this crisis,” BSP governor Benjamin Diokno said in a virtual briefing.
The BSP has allowed the banks’ MSME borrowings as alternative compliance to reserve requirements since last year.
This aims to increase banks’ liquidity and boost their ability to extend more loans to small businesses which are aimed at ensuring that economic activities remain robust despite the pandemic.
“Thus, customers are encouraged to approach banks regarding adjustments to their loan terms to match their cash flows and paying capacity,” Diokno said, adding that borrowers may raise concerns on their financial transactions through the BSP’s Online Buddy, which is available at the BSP website.
Diokno said restructured loans of banks rose to P328.6 billion, as of end-June this year, from about P48.7 billion during the same period in 2020.
This increased the share of restructured loans on total loans to around 3.1 percent as of the first half this year from 0.5 percent a year ago, he added.*PNA