BSP LAUNCHES credit risk database project for SMEs

The Bangko Sentral ng Pilipinas (BSP) kicked off the implementation of the Credit Risk Database (CRD) project for small and medium enterprises (SMEs) in a virtual launch held on Dec 10, 2020.

The project, which is a joint initiative of the BSP and the Japan International Cooperation Agency (JICA), aims to improve access to finance among SMEs by promoting risk-based lending and lessening the dependence of banks on collaterals during credit evaluation.

This will be achieved through the use of statistical credit scoring models to be developed on the CRD that can predict the probability of an SME to default.

The augmented access to credit of SMEs is expected to result in their enhanced productivity and competitiveness.

According to BSP Governor Benjamin E. Diokno, “The CRD project is a tangible step in building a sustainable financing ecosystem for SMEs, the backbone of our economy and the driver of the country’s inclusive economic growth.”

The lack of access to credit remains a fundamental obstacle to the further development and sustainability of SMEs.

The BSP explained that this is primarily attributed to SMEs’ reluctance to apply for bank loans due to lack of credit history and acceptable collateral; as well as banks’ perception that SMEs in general are high-risk.

SMEs were also heavily affected by the pandemic as lockdowns implemented forced businesses to cease operations or operate on a limited basis.

According to the BSP, both the government and private sector should provide much-needed support to SMEs to help them withstand this crisis and eventually recover and thrive beyond this pandemic.

As the country progress into the new normal and steer towards a strong post-pandemic economic recovery, the BSP expects CRD to be a vital enabling credit infrastructure in the country’s MSME financing ecosystem.

The virtual launch was participated by representatives from JICA, Chamber of Thrift Banks, Bankers Association of the Philippines, and Rural Bankers Association of the Philippines, as well as representatives from the 17 pioneer participating banks, namely: Land Bank of the Philippines (including Overseas Filipino Bank), Development Bank of the Philippines, Security Bank, Rizal Commercial Banking Corporation, Philippine Business Bank, Sterling Bank of Asia, China Bank Savings, Malayan Bank, Philippine Savings Bank, UCPB Savings Bank, Producers Savings Bank, Queen City Development Bank, Wealthbank, Sun Savings Bank, AllBank, CARD SME Bank and First Consolidated Bank.

In thanking the 17 pioneer participating banks, Governor Diokno highlighted that their participation in the project is a visible demonstration of their commitment to support the development of the SME sector and to the crucial work of nation building.

He also thanked JICA for their commitment towards socio-economic development in the Philippines, and the Japanese government for spurring the foundations which make its bilateral ties with the Philippines exceptional.