August 20, 2021

During a pandemic, bank loans to SMEs increase

Banks continue to lend to small companies, particularly since the Bangko Sentral ng Pilipinas (BSP) utilized borrowings from the sector as an alternative to reserve requirements.

According to BSP statistics, banks extended a total of PHP188.7 billion to micro, small, and medium businesses (MSMEs) as of July 29, much exceeding the PHP8.7 billion provided at the end of April 2020.

In a video briefing on Thursday, BSP Governor Benjamin Diokno remarked, “These figures show that banks continue to provide financial assistance to borrowers throughout this crisis.”

Since last year, the BSP has permitted banks to use MSME borrowings as a substitute to reserve requirements.

This is intended to improve banks’ liquidity and their capacity to issue additional loans to small companies, ensuring that economic activity remains stable throughout the epidemic.

“As a result, consumers are urged to contact banks about adjusting their loan conditions to fit their cash flows and paying capacity,” Diokno said, adding that borrowers may express concerns about their financial transactions through the BSP’s Online Buddy (BOB), which can be found on the BSP website.

According to Diokno, bank restructured debts increased to PHP328.6 billion as of the end of June this year, up from PHP48.7 billion in the same time in 2020.

According to him, this raised the proportion of restructured loans on total loans from 0.5 percent a year ago to approximately 3.1 percent in the first half of this year.

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