BSP approves revisions on MSMEs reports from banks

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) has revised its key reports required from banks on microfinance (MF) and related accounts for a comprehensive and more accurate picture of the scale and scope of banking services delivered to the micro, small, and medium enterprises (MSMEs) in the country. 

MSMEs are a significant part of the Association of Southeast Asian Nation (ASEAN) economy. To date, 96% of ASEAN enterprises are SMEs; comprise 50% to 95% of domestic employment; 30% to 53% of Gross Domestic Products (GDP); and 19% to 31% of exports.

The Monetary Board, in its Resolution No. 893, approved the revisions of the present reportorial requirements of banks offering microfinance loans and loans to microenterprises as well as the changes in the definitions of related accounts in the Financial Reporting Package (FRP), the BSP said in a statement on Friday, June 13.

SMEs, specifically micro enterprises which have the potential to move from small or medium enterprises still see that banks and other financial institutions are wary of lending to them since they have no financial documentation and records, no banking relations, and lack financial literacy. The information asymmetries on SME credit, availability or lack of collateralized credit, mismatch of financing programs to SMEs, and under-utilization of funds for SMEs in government-owned and controlled corporations (GOCCs), compound the problem.

Thus, the BSP revisions are expected to improve the quality of data being submitted by banks, which serve as inputs in formulating policies to further enhance the present regulatory environment in support of MSME lending.

For instance, the account “Microfinance Loans” in the FRP is renamed “Microenterprise Loans” to align with the other related account, “Small and Medium Enterprises Loans” which are based on the type of borrowers under the present Magna Carta for Micro, Small and Medium Enterprises. Further, all references to “microenterprises” are removed from the definition of the account, “Small and Medium Enterprises Loans,” to avoid any inconsistency in the definitions.

The monthly report, “Report on Microfinance Loans Outstanding,” is renamed “Report on Microfinance Products” to include the expanding menu of financial services like micro-deposits and wholesale MF loans.

Micro-deposits are savings accounts, with average daily balance of not more than P40,000, that cater to the needs of low-income clients. Wholesale MF loans, on the other hand, refer to loans granted by wholesaler banks to conduit financial entities (the “retailers”), such as banks and non-banks, for on-lending to qualified end-users.

Also, the quarterly report, “Income Statement on Microfinance Operations,” is renamed “Income Statement on Retail Microfinance Operations” to clarify that this report is only in reference to a bank’s “retail” MF operations, with borrowers as the end-users. The report does not include its regular lending and wholesale MF lending operations, if any.

Those banks with no MF operations, however, are expected to fill up only the item, “Other Microenterprises Loans” while those banks engaged only in wholesale MF lending are required to fill up only the item, “Wholesale Microfinance Operations” and its related sub-accounts under the monthly report, “Report on Microfinance Products.”

All banks, whether engaged in MF operations or not, are required to submit both the monthly and quarterly reports.

All banks, however, are required to submit the quarterly report, “Income Statement on Retail Microfinance Operations,” indicating the required data is not applicable. – Rappler.com