THE GOVERNMENT should consider creating a guarantee fund that would subsidize credit fees for first-time borrowers to boost financial inclusion in the country, the Bangko Sentral ng Pilipinas (BSP) said.
During the Asian Development Bank (ADB) Annual Meetings in Korea, BSP Governor and ADB Alternate Governor for the Philippines Felipe M. Medalla said digitalization allows for innovative solutions in financial services that can respond needs of the underserved.
“Through digital payments, borrowers can develop a track record. Once they have a track record, they can become bankable and graduate to the formal financial system,” Mr. Medalla said in a tweet.
“The government can also consider a guarantee fund to subsidize fees for first-time borrowers and bring them into the formal financial system,” he said.
He added that the private sector is “doing its part” to reach underserved consumers through agent banking and assisted transactions.
“There are many things we can achieve working together to expand access to credit in an effort to reduce both poverty and financial exclusion,” he added.
The central bank targets to make 50% of payments done online and 70% of Filipino adults to have a formal financial account by this year.
The BSP recently launched a credit scoring model that is expected to enhance credit risk assessment by lenders.
The Credit Risk Database Scoring Model is expected to serve as an additional tool that lenders can use to analyze the creditworthiness of micro-, small-, and medium-sized enterprises. — KBT