Presented during the 26th Anniversary of the CDAQuezon City

Credit Surety Fund (CSF)Credit Surety Fund (CSF)Sustaining economic growth through increased credit flows

Credit Surety Fund (CSF)Credit Surety Fund (CSF)Sustaining economic growth through increased credit flows

Augusto C. Lopez-DeeAugusto C. Lopez-DeeManaging DirectorManaging Director

Monetary Operations Sub-SectorMonetary Operations Sub-SectorBangko Sentral ng PilipinasBangko Sentral ng Pilipinas

Entrepreneur with good business model

Has expansion plans but lacks capital No collateral, no access to credit Unbankable

FINANCIAL INCLUSION? XX

INCLUSIVE GROWTH? XX

Seven years ago...Seven years ago...

Credit enhancement scheme that aims to improve the bankability and credit worthiness of micro, small and medium enterprises (MSMEs), including cooperatives and NGOs, which are experiencing difficulty in obtaining loans from banks due to lack of acceptable collaterals, credit knowledge and credit track records.

It takes the place of acceptable collaterals required by banks to secure the loan.

Credit Surety FundCredit Surety Fund

Credit Surety FundCredit Surety Fund

Credit Surety Fund

P5 millionP10 millionP11 millionP16 million

COOPs/NGOs LGU DBP Land Bank IGLF

Birthing the CSF

Credit Surety FundP21 million

TRUSTEE

Security or collateral for MSME loans

Oversight Committee

Elected Ex-OfficioCoop/NGO

representativesRepresentatives of LGU &

Partner Institutions

Not left to chance: governance structure

Who can join the CSF?Who can join the CSF?“Good members, good CSF”

Maximum Loan Amount

Up to 10 times the coops’ paid contributions to the CSF

Borrowers Coops/NGOs with business and/or their member-MSMEs

Surety Cover Minimum of 80% of the loan amount

Lenders Banks with rediscounting line with the BSP, DBP or LBP

Terms and conditions, once again…

45 CSFs established nationwide

Source: Bangko Sentral ng Pilipinas

Source: Bangko Sentral ng Pilipinas

45 CSFs established nationwide45 CSFs established nationwideAs of 31 December 2015 As of 31 December 2015

LUZON

1. Cavite2. Aurora Province 3. Albay 4. Occidental Mindoro5. Pangasinan6. Oriental Mindoro 7. Benguet 8. Puerto Princesa City 9. Palawan 10. Laguna 11. Baguio City 12. Tarlac

11. Bataan12. Quezon City 13. Marikina City 16. San Jose City, N.E.17. Science City of Munoz18. Nueva Vizcaya19. Zambales20. Cagayan21. Nueva Ecija22. Santiago City, Isabela23. Parañaque24. Cabanatuan

VISAYAS

MINDANAO

1. Davao del Norte2. Compostela Valley3. Davao Oriental4. North Cotabato5. Zamboanga del Norte &

Dipolog City6. South Cotabato7. Sarangani8. General Santos City9. Davao City10. Northern Mindanao11. Agusan del Norte12. Butuan City13. Malaybalay City, Bukidnon14. Valencia City, Bukidnon5. Cebu

6. Capiz7. Aklan

CSF Performance

Republic Act No. 10744“Credit Surety Fund Cooperative Act of 2015”

06 February 2016

AN ACT PROVIDING FOR THE CREATION AND ORGANIZATION OF CSF COOPERATIVES TO MANAGE AND ADMINISTER CREDIT SURETY FUNDS TO ENHANCE THE ACCESSIBILITY OF MICRO, SMALL AND MEDIUM ENTREPRENEURS, COOPERATIVES AND NONGOVERNMENT ORGANIZATIONS TO THE CREDIT FACILITY OF BANKS AND FOR OTHER PURPOSES.

Sustainability of the Credit Surety FundSustainability of the Credit Surety Fund

RepublicRepublic Act No. 10744Act No. 10744Year Events

28 Jul 2011 House Bill (HB) 4970 (original version)

Filed by Representatives Erico Aumentado and Jocelyn Limkaichong at the House of Representatives

Referred Committee on Small Business & Entrepreneurship Development

2012 Creation of TWG to study the bill. Series of meetings

30 April 2013 HB 4970 was archived due to 2013 Philippine General Elections

30 Jul 2013 HB No. 278 Refiled version by Coop-NATCCO Representative Cresente C. Paez House Bill was referred to the Committee on Banks and Financial

Intermediaries chaired by Rep. Sonny Collantes.07 May 2014 Senate Bill No. 2218

Filed by Sen. Bam Aquino in the Senate Senate Bill was referred to the Committee on Trade, Commerce and

Entrepreneurship.

RepublicRepublic Act No. 10744Act No. 10744Year Events

11 Aug 2015 HB 278 was substituted by HB 6007 per Committee Report No. 827.

19 Aug 2015 SB 2218 was substituted by SB 2909 as approved in the Committee on Trade, Business and Entrepreneurship.

27 Aug 2015 HB 6007 passed on 3rd Reading at the Plenary. Submitted to Senate.

05 Oct 2015 SB 2909 approved on 3rd reading at the Senate.

14 Oct 2015 Bicameral Conference Committee was held to unify the provisions of the two bills.

26 Nov 2015 Consolidated Bill adopted by the Senate

02 Dec 2015 Consolidated Bill adopted by the House of Representatives

05 Jan 2015 Enrolled Bill signed by Congress forwarded to the Office of the President

06 Feb 2015 Enrolled Bill enacted into Law as Republic Act No. 10744

RepublicRepublic Act No. 10744Act No. 10744Credit Surety Fund Cooperative Act of 2015Credit Surety Fund Cooperative Act of 2015

Salient features:•Grants juridical personality to a proposed CSF Cooperative and is evidenced by a Certificate of Registration;•Exemption from the Insurance Code (not doing an insurance business)•Tax exemption of CSF Cooperatives•Limited liability of CSF stakeholders•Maximum loan availment (10 times of contribution)

Role of the Cooperative Development AuthorityRole of the Cooperative Development Authority

1. Regulation• Formulate policies on the registration of CSF Cooperatives• Issue, with the assistance of the BSP, the Implementing Rules

and Regulations

2. Supervision and Monitoring•Supervise activities of the CSF•Investigate and impose sanctions, including suspension of operations of erring CSF Coops, for violation of laws, rules and orders•Require submission of annual, semi-annual or quarterly reports, financial statements, board resolutions•Conduct regular examination or inspection of documents•Set performance standards for proper operation of CSFs•Submit annual status report of each CSF Cooperative to the DOF and BSP

RepublicRepublic Act No. 10744Act No. 10744

Role of the Bangko Sentral ng PilipinasRole of the Bangko Sentral ng Pilipinas1. Spearhead the promotion, encouragement, creation and

organizational development of CSF Cooperatives all over the country

2. Facilitate the acquisition of technical assistance such as training and seminars in coordination with other public or private stakeholders for purposes of the CSF; and

3. Assist the CDA in setting the criteria and qualifications for CSF Cooperatives and provide such other forms of assistance as may be determined by the Monetary Board to be consistent with its mandate.

RepublicRepublic Act No. 10744Act No. 10744

Entrepreneur with good business model

Has expansion plans but lacks capital

Can now access bank credit even without hard collaterals

Financial Freedom

INCLUSIVE GROWTH

Seven years hence...Seven years hence...

Thank you.

Augusto C. Lopez-DeeAugusto C. Lopez-DeeManaging DirectorManaging Director

Monetary Operations Sub-SectorMonetary Operations Sub-SectorBangko Sentral ng PilipinasBangko Sentral ng Pilipinas

Credit Surety FundCredit Surety FundSustaining economic growth through increased credit flows