Trade and Industry Secretary Jesli A. Lapus has urged for a review of the data on the mandatory bank relending program to the MSME (micro, small and medium) sector on high probability of double counting and therefore high level of non-compliance by banks even as he called for higher penalty for a bank’s failure to comply.

Lapus said that getting the correct picture as to the exact amount of money being loaned out by banks to the MSME is necessary as the government seeks to further make credit more accessible to the poor in the countryside.

Lapus feared that instead of the money being relend to the poor to create economic activities in the countryside, the money was put in a freezer.

Lapus said that the data provided by the Bangko Sentral ng Pilipinas of P230 billion having been lent out to the MSMEs in 2009 could have been bloated.

Under the Magna Carta for MSMEs, banks are required to relend a minimum of 10 percent of its total loanable portfolio. There have been alternative forms of compliance like the Agri-Agra Law, which provides financing to farmers.

Banks are penalized under the law if they do not comply with requirement. The penalty is P500,000 for non-compliance.

“I want them to check the probability of double counting of amounts so we need to improve the reporting and monitoring or the management information system because this so important as we prepare the MSME Development strategy,” he said.

According to Lapus, the current figure could have been bloated because it is comprised of the “whole universe,” meaning the wholesale banks, universal and commercial banks lending for relending to cooperatives, rural and thrift banks, non-governmental organizations, and other micro lenders.

“In reality, how much really was loaned out,” he said.

In addition, Lapus would like a review of who may have benefited the amount being lent out because of the same strong possibility of double counting.

Lapus suggested that the amount that banks should relend to the MSME should be proportionate to the size of the bank.

“The penalty now for non compliance is a maximum of P500,000 but there is no qualification,” he said noting that if a bank’s total loan portfolio is P2 billion then he would rather pay the penalty than go through all the hassles of lending to the MSME since the bank could earn more by using the money for other high yielding instruments.

Lapus also noted that one form of compliance should be through debt instrument from the SB Corporation, but there must also be a cap to avoid banks from using SB Corp. as their sole compliance option.