[av_one_full first min_height=” vertical_alignment=” space=” custom_margin=” margin=’0px’ padding=’0px’ border=” border_color=” radius=’0px’ background_color=” src=” background_position=’top left’ background_repeat=’no-repeat’ animation=”]
[av_heading heading=’Privatize government lending programs’ tag=’h3′ style=’blockquote modern-quote’ size=” subheading_active=’subheading_below’ subheading_size=’15’ padding=’10’ color=” custom_font=”]
BY JOHNNY NOVERA
[/av_heading]
[av_textblock size=” font_color=’custom’ color=’#0a0a0a’]
Wednesday, February 1, 2017
[/av_textblock]
[av_textblock size=” font_color=’custom’ color=’#0a0a0a’]
CONGRESS recently approved an allocation of P1 billion to fund a lending program by government called “Pondo para sa Pagbago at Pag-Asenso” that will be implemented by the Department of Trade and Industry (DTI) by way of low-interest loans to business. It is intended especially for small borrowers like market vendors and owners of tiangges that are victims of the so-called “5-6” lending scheme from loan sharks like the Bombays or Indians on motorcycles.
The Bombays grant fast and easy loans but they charge high interest rates on daily basis. They also impose their additional business on borrowers by selling them table and kitchenware products like plates, tumblers, kettles, drinking glasses, thermos bottles, etc.
Our column last week was about the new service which we called “Banking with a sari-sari store” introduced by Bangko Sentral ng Pilipinas (BSP), with cash agents to be appointed by banks under BSP rules. They are authorized to accept and disburse cash from banks to facilitate on-line self-service deposits, withdrawals and fund transfers, as well as bills payment. Cash agents would include our present-day sari-sari or convenience stores, pharmacies and other highly accessible retail outlets.
When Joseph “Erap” Estrada first assumed office as President in 1998, we remember attending a public hearing at Hotel del Rio conducted by a team of government agents from the Department of Finance that came from Manila. What happened at that time was that many government departments and agencies have lending or assistance programs that left millions in government funds uncollected and becoming bad debts. They came out with the recommendation that funds be transferred to government banks that can manage loans better than government departments or agencies.
It will be a serious setback in the government’s desire to help small merchants if the lending programs fail and bring back again the 5/6 operators.
We would therefore recommend that government funds in DTI’s Pondo Para sa Pagbago at Pag-Asenso above be coursed or entrusted to our rural banks that operate in the countryside.
In this way our government can infuse funds to the rural areas where they are needed most and provide the Department of Trade and Industry (DTI) support without being exposed to financial risks. Government departments do not have lending experience like banks.
All that the agency involved will do, in this case the DTI, is to provide policy guidelines as to interest rates to be charged on loans to market vendors or sari-sari store owners, fix loan limits and then exercise oversight function on the program.
The rural banks will be expected to charge an interest override and handling fee but may be that is about all.
We believe that privatized lending programs through rural banks as we advised here can protect government from recurrent and potential losses. (For comments or reactions, please e-mail to jnoveracompany@yahoo.com)/PN
[/av_textblock]
[/av_one_full]
