Central Bank sees positive lending activities in 2007

The business sector can expect an improved lending activities this year as the banking sector posted a good performance in the last couple of years.

Bangko Sentral Ng Pilipinas (BSP) managing director Cyd Tuaño-Amador said that this development could benefit the thick Small and Medium Entrepreneurs (SMEs) in the country, as they are now the target for lending activities of the banking institutions.

Immediately after the 1997 regional economic crisis, the banking sector had been very stringent in offering corporate loans, especially to the SMEs, not until in the mid-2000 that the banking sector had started to open its doors to small and medium players for loans.

Last year, the Philippine banking sector grew by an average of 24 percent. Non-performing loans (NPL) have declined to 6.4 percent. This development pushed the banking institutions to re-open its doors to corporate borrowers.

As part of the government's bid to strengthen the micro-finance support to reduce poverty, Amador said sustained advocacy for micro-finance has benefited more and more SMEs across the country.

In fact, there were a total of 650,000 Filipinos last year who were able to avail of the micro-finance assistance, offered by the banks.

To date, there are over 200 banks now engaged in micro-finance activities with a loan portfolio of P4 billion.

Access to financing is the long-standing problem of SMEs, including the micro business players, specifically in Cebu, as banks continued to be choosy in granting corporate loans to the business sector.

However, Amador vowed that starting this year, the business sector including the micro business players could expect a friendlier environment for lending in the banking sector.

Because of the growing number of Overseas Filipino Workers (OFWs), steady inflow of money to the banking system is assured, thus, boosting the entire banking system in the Philippines.

The Arroyo administration is encouraging more credit cooperatives, micro-finance NGOs (Non-governmental organizations), thrift and rural banks to offer micro-finance products and services, adopt micro-finance best practices and institutionalize mandatory savings for micro-finance borrowers as demonstrated by different programs introduced by the government.

These programs include; Micro-enterprise Access to Banking Services (MABS), Association for Social Advancement (ASA), Credit Union Empowerment and Strengthening (CUES), and Helping Reach Their Aspirations Through Micro-credit (HIRAM) Program.

Through these programs, the Arroyo-led government targets to provide financing assistance through loans to about 4.2 million new micro-finance borrowers by 2010, with a total loan amount increased by P43.5 billion.