New fund seen to ensure Bicol's high growth rate

LEGAZPI CITY, Philippines  — Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. who personally launched the credit surety fund (CSF) movement in Albay Thursday morning told the members of the Albay Mayon Credit Surety Fund that CSF can sustain the impressive growth of Bicol.

Tetangco said that loan deposit ratio in Bicol remains low with deposits reaching P53 billion in 2009 while loans were only at P14-billion mark.

 “Clearly, you have a loyal and growing base of depositors and yet your loans to deposit ratios are low,” said Tetangco, adding that “possibly the guarantee provided by the credit surety fund for bank lending could well be the catalyst that will move lending forward here in Bicol.”

“I am confident that Albay Mayon CSF will serve as a positive catalyst that will further accelerate the development of the Bicol Region.”

Tetangco said that with CSF, Albay entrepreneurs can gain access to bank loans even without collaterals, providing an option for financially-challenged entrepreneurs who are forced to source funds from informal lenders at very high interest rates.

“CSF is also positive for banks because even without collaterals bank loans made under CSF are effectively insured against default by the surety fund set up jointly by the LGUs and other partner organizations.”

“You may ask does it really work? Well, based on our experience from the first 11 CSF it works,” he said. Aside from Albay the 11 provinces enrolled under the CSF are Aurora, Bohol, Cavite, Compostela Velley, Davao del Norte, Davao Oriental, Negros Oriental, Negros Occidental and North Cotabato, including the cities of Cebu and Iloilo.

The combined assets of the cooperatives and non-governmental organizations (NGOs) which are members of the first 11 CSF is now valued at P8 billion with P2.6 billion representing equity.

The first 11 CSF are made up of 173 cooperatives and three NGOs with total membership of close to 200,000, making the sheer financial muscle and reach of the CSFs speak of the tremendous potential of the program.

“Aside from that the total trust fund of the 11 CSFs have reached P98 billion, including P51 million contributed by the coops and NGOs which translates to a total potential loan of P511 million at any one time,” Tetangco said.

He added the loans booked under the program reached P53 million with loans helping not only end-borrowers finance the needs of their business but also helped their immediate communities as well. Loan applications amounting to P156 million are in various stages of processing and approval.

“Given these numbers, it’s safe to say that CSFs have gained traction with the support from the LGUs, the Land Bank of the Philipines, the Development Bank of the PHilippnes, the Industrial Guarantee and Loan Fund including the IGLFs support for the training of contributing coops on credit appraisal and monitoring, basic accounting, marketing and credit risk management,” he said.

Also, the University of the Philippnes’ Institute of Small Scale Industries has conducted 10 runs of these training courses which have benefited some 243 coops and NGO members.

“Nevertheless, we will be the first to say that CSF is not perfect. In this imperfect world, there is always room for improvement. The key is to have all parties with those who will screen and evaluate the loan applications.”

Tetangco said he is looking forward to a repeat of the impressive 8.2-percent growth of Bicol’s gross domestic product (GDP), the highest among the 17 regions in the country in 2009.

“With the CSF in place, we hope Albay’s MSMEs will develop at a more balanced and sustained pace and should exert a positive influence on the continuing development of the Bicol Region,” said Tetangco who was the guest of honor during the launching at the modern St. Ellis Hotel here.

Albay Governor Joey Salceda, who chairs the Regional Development Council (RDC), thanked Tetangco and the Monetary Board for the P277-million modern BSP facility in Barangay Cabangan here, the Electronic Financial Learning Center as well as the proposed new currency bill that would feature Mayon Volcano and Donsol as a big boost to Bicol’s tourism marketing.