BusinessWorld
Finance
Posted on June 07, 2013 06:33:16 PM
THE GOVERNMENT will soon establish a registry system for non-real property assets in a bid to encourage financial institutions to accept such items as collateral and ease small business access to credit.
The scheme is part of the department’s memorandum of understanding with the World Bank Group’s International Finance Corp. (IFC) to jointly develop better regulations on movable assets taken as collateral, and establish a centralized electronic notice registry to publicize lender security interests on movable assets.
The initiative is supported by the IFC’s financial infrastructure program for East Asia and the Pacific, which is funded by the Swiss State Secretariat for Economic Affairs.
“It will enhance and simplify the processes on taking movable assets, such as inventory, equipment, sales contracts, quedan and other intangible assets, as collateral,” the Finance department said in the statement.
“With the movable collateral registry in place, banks and other financial institutions will no longer rely heavily on real estate as collateral since the system will enhance transparency and accessibility to information on the other assets provided as collateral,” it explained.
Finance Undersecretary Gil S. Beltran, who is concurrent National Credit Council executive director, said financial institutions are not keen on accepting assets other than lands mainly because of the absence of such a registry system for non-real property assets.
“The reluctance of banks to accept movable assets as collateral for loans is one of the main barriers to inclusive economic growth,” said Mr. Beltran in the statement.
“An improved registry and other regulatory reforms involving the use of movable assets as collateral will help banks mitigate the risks and enable them to lend more to small businesses for their additional capital requirements and expansion plans,” he said.
Jesse O. Ang, IFC resident representative to the Philippines, noted that the system will help micro, small, and medium enterprises (MSMEs) -- which usually have only movable assets to offer as collateral for loans-get easier access to credit.
“The reforms will help reduce the cost of credit and increase credit availability,” Mr. Ang was also quoted as saying in the statement.
“Small and medium enterprises will then be able to leverage their movable assets and obtain capital to further invest in their businesses,” he said.
Mr. Ang added that the reforms can help promote credit diversification, and thus create a more robust financial system.
The Finance department also noted that increased lending to MSMEs is seen to further boost economic development and job generation.
Among the signatories to the framework were the Finance department, IFC, the Bangko Sentral ng Pilipinas, the Securities and Exchange Commission, Credit Information Corp., the Small and Medium Enterprise Development Council, and the Cooperative Development Authority, as well as government financial institutions like the Development Bank of the Philippines and the Land Bank of the Philippines.
Private sector groups such as the Bankers’ Association of the Philippines, the Chamber of Thrift Banks, the Rural Bankers’ Association of the Philippines, the Philippine Finance Association, and the Microfinance Council of the Philippines, Inc. also signed to signify their support for the initiative. -- Bettina Faye V. Ro
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