BANK loans to micro and small enterprises (MSEs) remained below required levels as of the end of March, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The Magna Carta for MSMEs (micro, small and medium enterprises), or Republic Act 6977, mandates banks to set aside at least 8 percent of their total loan portfolio for MSEs and at least 2 percent for MEs.

As of the end of March, banks should have set aside P861.76 billion for micro and small firms and P215.44 billion for medium enterprises out of a total loan portfolio of P10.77 trillion.

Banks, however, only lent a total of P191.28 billion to MSEs, P670.48 billion short of the requirement.

They were, however, able to lend P283.65 billion to MEs, or P68.21 billion more than programmed.

Universal and commercial banks, which accounted for the bulk or P9.93 trillion of the industry's total loan portfolio, were supposed to lend P794.54 billion to MSEs and P198.64 billion to MEs.

As of end-March 2024, compliance was just at P122.52 billion for micro and small firms, P672.02 billion short, while P235.21 billion was lent to medium firms — P36.58 million more than what was required.

Microenterprises are firms whose assets do not exceed P3 million, while small businesses are those with assets of more than P3 million but not exceeding P15 million. Medium-sized ones, meanwhile, are those whose assets range from more than P15 million to P100 million.

Banks are required to submit quarterly reports on lending to the BSP. Failure to comply with the lending requirement carries sanctions of up to P500,000 for zero compliance and a sum based on the percentage of the undercompliance.

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