BSP, IFC aim to expand credit access

THE Bangko Sentral ng Pilipinas (BSP) on Wednesday said that it had signed a memorandum of understanding with the World Bank Group's International Finance Corp. (IFC) to jointly develop the country's movable asset finance (MAF) market and expand credit access for micro, small and medium enterprises (MSMEs) and the agricultural sector.

The two-year agreement will promote the use of movable assets — such as equipment, inventory and accounts receivable — as collateral for loans. It aims to ease financing constraints among businesses that lack real estate assets which is a traditional requirement of lenders.

It aims to broaden financial access for underserved sectors, particularly in rural areas where access to traditional banking services is still limited.

The BSP noted the MAF market remained underdeveloped despite the country having a legal framework in place — the Personal Property Security Act.

"The partnership is meant to complement the law and significantly increase loans secured by movable assets. MSMEs and agri-enterprises can now use their available assets to access financing for their working capital and other needs," BSP Governor Eli Remolona Jr. said.

The initiative is aligned with the country's National Strategy for Financial Inclusion 2022-2028 and the vision to promote inclusive growth and financial resilience, BSP Deputy Governor Bernadette Romulo-Puyat said.

The agreement likewise authorizes the BSP and IFC to push for regulatory reforms, strengthen sectoral capacities and promote the development of supporting services crucial to the success of MAF in the Philippines.

A 2022 IFC study found that loans secured by movable assets accounted for less than 5 percent of total financing in the country. The BSP-IFC collaboration seeks to bridge this gap and encourage more lenders to consider movable assets as viable collateral.