THE Credit Surety Fund (CSF) movement is quickly gaining ground.

Just two years after the first loan guarantee facility of its kind was established in Cavite, the Bangko Sentral ng Pilipinas and its partners launched the Albay Mayon Credit Surety Fund last month.

The Bicol-based fund, introduced to the public last August 12, became the 12th CSF to be created since the program started in 2008.

BSP Governor Amando Tetangco Jr. explained that the CSF is the vehicle developed by the central monetary authority under its inclusive financial services program to improve access by the “unbanked” and “underbank” to credit and other banking services.

Through the program, entrepreneurs gain access to bank loans even without collaterals. Before the CSF was conceived, financially challenged businessmen sourced their funds from informal lenders at exorbitant interest rates.

Tetangco added that aside from helping micro, small, and medium enterprises, the CSF also benefits the local banking industry. He explained that even without collaterals, bank loans made under the CSF are effectively insured against default by the surety fund.

The BSP governor noted the success of the surety fund program, basing his observation on the experiences of the other CSFs.

As of July 31, 2010, were 11 CSFs set up ahead of the Albay Mayon Credit Surety Fund. These are located in the provinces of Aurora, Bohol, Cavite, Compostela Valley, Davao del Norte, Davao Oriental, Negros Occidental, Negros Oriental, and North Cotabato, as well as in the cities of Cebu and Iloilo.

These 11 CSFs are made up of 173 cooperatives and three non-government organizations with close to 200,000 members.

The sheer financial muscle and reach of the CSFs speak of the tremendous potential of the program, Tetangco stressed.

The total combined assets of the cooperatives and the NGOs that are members the first 11 CSFs is valued at P8 billion, of which P2.6 billion represents equity.

The total trust funds of these 11 CSFs have reached P98 million, including the P51 million contributed by the CSFs and NGOs. This translates to a total potential loan of around half a billion pesos at any given time.

Tetangco also said the total loans booked under the program have reached P53 million. Loan applications amounting to P156 million are now in various stages of processing and approval, he added.

These loans, according to the BSP head, have not only helped end-user borrowers finance the needs of their businesses but also helped their immediate communities as well.

The BSP’s local government partners, as well as its institutional partners such as the Land Bank of the Philippines, the Development Bank of the Philippines, and the Industrial Guarantee and Loan Fund, deserve equal credit for the CSF’s success.

The IGLF’s support in the training of contributing cooperatives on credit appraisal and monitoring, basic accounting, marketing, and credit risk management is particularly noteworthy.

The BSP also acknowledges the efforts of the University of the Philippines’ Institute of Small Scale Industries, which has conducted 10 runs of intensive training courses that have benefited 243 cooperative and NGO members.

(To be concluded next week)

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