by Noel Baguio

Davao City (4 August) -- The Bangko Sentral ng Pilipinas (BSP) set up its credit surety facility for Mindanao by launching credit surety funds (CSFs) in Davao del Norte and Compostela Valley provinces.

BSP Governor Amando Tetangco, Jr. led the launching of the Davao del Norte Credit Surety Fund and Compostela Vallley Coop Negosyo Surety Fund, together with Governor Rodolfo del Rosario and Gov. Arturo Uy, respectively, last July 31, 2009 at the BSP's regional office in Davao City.

The three officials signed the memorandum of agreement on the creation of the particular CSFs, together with Cooperative Development Authority Chair Lecira Juarez, DavNor Vice Gov. Victorio Suaybaguio, ComVal Vice Gov. Ramil Gentugaya, heads of donor institutions and chairpersons of participating cooperatives.

BSP Monetary Board Members Juanita Amatong, Alfredo Antonio, Raul Boncan, Ignacio Bunye, and Nelly Villafuerte were also present to lend their support. For a moment, mother province Davao del Norte broke the record for having the largest number of participating cooperatives during the launch with a total of 21 cooperatives.

However, after only more than 10 minutes such record was again broken by ComVal for involving 22 cooperatives during the signing of their MOA. Gov. Tetangco explained the two provinces were chosen as role models in accelerating their respective micro, small and medium enterprises (MSMEs) not only for their vast, varied and rich natural resources, as he cited DavNor's prominence as producer of world-class fruits and ComVal's importance as a gold-rich province.

However, he underscored the great quality of the two provinces as "home of the most vibrant cooperatives in the country." With the CSF program, MSMEs can now access credit from banks without worrying about collateral. Tetangco said under the CSF, the bank no longer requires collateral from the MSME borrower.

Instead the bank receives a surety cover that guarantees payment of the MSME loan from the CSF. The fund addresses the lack of collateral on the part of MSMEs, as well as the risks on the part of banks that are lending to MSMEs. In the event the borrower defaults from his payment, according to the BSP governor, the bank promptly collects their paid amount from the CSF.

He urged all the parties to be faithful in doing their respective responsibilities, asking them to exercise due diligence in making sure that surety covers are made available only to borrowers with established track record for debt payments.

"The key to ensuring the success of the CSF program is faithful adherence to good governance of all parties involved - from the borrower to the cooperative that will recommend the approval of the loan," he said.

If managed properly by the cooperatives and given strong support by the local government units, Tetangco is sure the CSF program can truly make a difference in uplifting the lives of Filipinos, particularly those in the marginalized sectors. DavNor's Gov. Del Rosario acknowledged the program provides a big boost to his strong support to the cooperative movement in the province, which is being enshrined in his development strategy, known as the RDR WHEELS.