Bank lending to MSMEs still short of mandated level

Bank lending to micro, small and medium enterprises (MSMEs) continued to grow in the first half, but remained far below the mandated threshold set under the Magna Carta for small and medium firms.

- By KEISHA TA-ASAN

Data from the Bangko Sentral ng Pilipinas showed that loans extended to MSMEs rose by 10.8 percent to P540.92 billion as of end-June from P488.13 billion a year earlier.

Despite the increase, the banking sector's overall compliance ratio stood at only 4.59 percent, less than half of the 10-percent quota required under Republic Act 6977, as amended by RA 8289 and RA 9501.

The law requires banks to set aside eight percent of their loan portfolio for micro and small enterprises as well as two percent for medium firms.