THE CENTRAL BANK wants to require lenders to allocate credit for the development of new technologies and innovations for various services.
Based on a draft circular posted on their website, the Bangko Sentral ng Pilipinas (BSP) wants lenders to allocate 4% of their loanable funds for innovation development credit.
“The banking system plays a crucial role in providing credit necessary to support the development of new technologies and other innovation-related activities,” it said.
The minimum credit allocation will be up for a joint review by the National Innovation Council and the BSP three years after the circular takes effect.
Eligible loans that can be included as direct compliance under the proposal are those granted to qualified borrowers after Aug. 6, 2019. These borrowings should have been used to develop new technologies and innovations for products, processes, organization, and marketing.
Credit that can be counted as alternative compliance for innovative development will include loans to micro-, small-, and medium-sized enterprises that have businesses related to e-commerce and supply chain financing.
Banks’ investments in bonds for innovation and those related to food security, blue economy, education, health, clean and renewable energy, climate change, infrastructure, human capital development, digital economy and transportation will also count as alternative compliance.
Lastly, investments in equities of startups may also be counted as compliance, subject to limits set by the central bank.
The proposal showed the BSP is also looking to make innovative development lending serve as an alternative mode of compliance to the mandatory credit allocation for agriculture and agrarian reform.
Failure to meet the minimum 4% quota will result in penalties equivalent to 0.5% of the missed minimum compliance requirement for innovation development.
For its part, the BSP will remit 90% of the total penalties from the non-compliant financial institutions to the Innovation Fund under the National Innovation Council that is meant to strengthen enterprises that develop new solutions. The remaining 10% will be used for the BSP’s administrative expenses.
Stakeholders are given until March 25 to give their feedback on the proposed circular.
The central bank has been supportive of boosting the digital economy as it wants 50% of all payments done online by 2023.
BSP Governor Benjamin E. Diokno said they will continue to prioritize digitalization efforts that support small businesses.
“Our initiatives include bringing digital payments closer to the people by promoting its use in the most common transaction points for most Filipinos — the community markets and local transportation services such as tricycles,” he said in a virtual speech at the launch of the first Digital Financial Inclusion Awards. — Luz Wendy T. Noble