and Administer Credit Surety Funds to Enhance the Accessibility - - PowerPoint PPT Presentation

An Act Providing for the Creation and Organization

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Credit Surety Fund Cooperatives to Manage and Administer Credit Surety Funds to Enhance the Accessibility of Micro, Small and Medium Enterprises, Cooperatives and Non-Government Organizations to the Credit Facility of Banks and for Other Purposes.

 The CSF Act lapsed into law on February 6, 2016.  Its Implementing Rules and Regulations (IRR) was published in

the Official Gazette on October 9, 2017.

 The CSF is a credit enhancement scheme that aims to increase

the creditworthiness of MSMEs which are experiencing difficulty in obtaining loans from banks due to lack of acceptable collaterals, credit knowledge and credit track records.

 This credit enhancement program is designed to link the

important players that would make the program successful.

 Cooperatives  Non-Government Organizations (NGOs)  Local Government Units (LGUs)  Government Financial Institutions (GFIs)  Industrial Guaranty Loan Fund (IGLF)  Banks  Government Agencies

 The

BSP spearheads the promotion, encouragement, creation and

• rganizational

development of CSF Cooperatives all over the country;

 Grants juridical personality to a proposed CSF

Cooperative and is evidenced by a Certificate of Registration issued by the CDA;

 The CDA is the lead government implementing this

Act and is responsible for the registration, regulation, monitoring and supervision of CSF Cooperatives;

 Exemption from the Insurance Code (not doing an

insurance business) in issuing surety covers;

 Tax exemption of CSF Cooperatives;  Limited liability of CSF stakeholders;

 Maximum loan availment (10 times of contribution);  Authorizes

the CDA to create a CSF Department specifically designated for CSF Cooperatives’ concerns;

 A member cooperative/NGO may own more than 10% of

the total subscribed capital of the CSF Cooperative but not more than 50%.

 A CSF Cooperative is neither a primary nor a secondary

• cooperative. It’s not even a tertiary cooperative but a

special type of its own.

The CDA shall be the government entity in charge of registration, regulation and supervision of CSF Cooperatives. (1) The CDA shall formulate policies on the registration of CSF Cooperatives, including the setting

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criteria and qualifications for cooperatives and NGOs that are interested to join the CSF; and (2) The CDA shall issue, with the assistance of the BSP , the implementing rules and regulations implementing the provisions of this Act.

The CDA shall enforce and monitor compliance of CSF Cooperatives with this Act and its implementing rules and regulations to promote the stability and sustainability of the CSF Fund. Thus, the CDA shall: (1) Supervise the activities of the CSF Cooperatives to ensure compliance with this Act. (2) Investigate and impose sanctions, including the suspension of operations of erring CSF Cooperatives, for violation of laws, rules and orders.

(3) Require the annual, semi-annual or quarterly submission, as the case may be, of reports, financial statements, board resolutions and such

• ther

documents as may be deemed necessary by the CDA to ensure compliance with this Act, its implementing rules and regulations and other rules. (4) Conduct regular examination or inspection of the above documents to check the validity of reports submitted. (5) Set the performance standards for the proper

• peration of all CSF Cooperatives.

(6) Submit an annual status report of each CSF Cooperative to the Department of Finance (DOF) and the BSP .

(a) Conduct confirmation of borrower’s loans and

• cular inspection of projects financed through the

CSF; b) Maintain a public registry

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participating cooperatives/NGOs and lending banks; and c) Perform all

• ther

relevant functions and responsibilities as may be determined by the CDA.

DEPARTMENT DIRECTOR CHIEF

SUPERVISING CDS SENIOR CDS CDS II CDS I

CHIEF

SUPERVISING CDS SENIOR CDS CDS II CDS I SENIOR CDS CDS II CDS I

15 EOs

ADMIN ASSISTANT

ORGANIZATIONAL STRUCTURE

(a) Spearhead the promotion, encouragement, creation and

• rganizational

development

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CSF Cooperatives all over the country; b) Facilitate the acquisition by CSF Cooperatives

• f technical assistance such as trainings and seminars

in coordination with

• ther

public

• r

private stakeholders for purposes of the CSF; and c) Assist the CDA in setting the criteria and qualifications for CSF Cooperatives, and provide such

• ther forms of assistance as may be determined by

the Monetary Board to be consistent with its mandate.

– a fund generated from the contributions of well- capitalized and well-managed member- cooperatives/NGOs,- LGUs, GFIs and

• ther

institutions/government agencies. In lieu of hard collaterals, the CSF shall serve as security for the loans that will be obtained by qualified borrowers from lending banks by way of a surety cover issued by the Board of Directors of the CSF Cooperative;

Only well-capitalized and well- managed cooperatives, with duly approved application for membership, and have contributed a minimum amount of P100,000.00 may participate as member

• f a CSF Cooperative.

 With an adjusted asset of at least P1M;  With an Adjusted Capital to Adjusted Assets

Ratio (CAR) of at least twenty percent (20%).

 Must be registered with the CDA as evidenced by a

Certificate

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Registration and Certificate

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Compliance;

 Must be registered with the BIR and other relevant

GAs;

 Must be in existence for at least one year;  Must be earning based on the latest audited

financial statements submitted to the CDA;

 Must

have adopted sound lending policies and practices;

 Must have audited financial statements;  Members of the Board and Credit Committee must

have acquired CDA’s mandatory training hours;

 Must have no past due obligations with any of its

creditors; and

 Must not have any existing leadership dispute or any

• r any other cooperative dispute filed with the CDA
• r any court or tribunal.

Non-stock, non profit

• rganizations

duly registered with the Securities and Exchange Commission (SEC), focusing on the upliftment

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the basic

• r

disadvantaged sectors

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society by providing advocacy, training, community

• rganizing, research, access to resources,

provision of microfinance programs and services, or other similar activities

 Must be registered with the SEC, as evidenced

by a Certificate of Registration;

 Must be registered with the BIR and other

relevant GAs;

 Must be in existence for at least one year and

earning;

 Must have adopted sound lending policies and

practices;

 Must have audited financial statements;  Must have no past due obligations with any of

its creditors.

• may be organized and registered by at least

8 members including the LGU, GFIs and other Government Agencies.

• the governing body of the CSF Cooperative. It

is entrusted with the sound and prudent administration of the CSF Cooperative.

• The

representatives

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the member- cooperatives/NGOs, GFIs and

• ther

government agencies

• The

LGU representative who shall sit as an ex officio member without voting rights.

 Unless otherwise provided in the Bylaws, it

shall be composed of not less than 7 and not more than 15 members.

If Investment – 1.0% of contributions shall be booked as paid-up share capital while the 99.0% shall be booked as Restricted Capital for Surety. If Grant - shall be booked as 100% Restricted Capital for Surety.

– refers to contributions of cooperatives, NGOs, LGUs, GFIs, IGLF , GAs, individuals and private entities which shall form part of the Credit Surety Fund managed by a trustee bank. It shall be solely used to pay contingent liabilities resulting from claims on past due loans.

– member-cooperatives which attest to the CSF Cooperative the creditworthiness of their member- borrowers and thru the issuance

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a board resolution, bind themselves jointly and severally with the borrower in the event of the latter’s default;

a) A cooperative which is a member of the CSF

Cooperative endorsing for this purpose its individual MSME member; and

b) A secondary or tertiary cooperative which is a

member of the CSF Cooperative endorsing for this purpose its primary or secondary cooperatives.

– refers to the persons/entities who may borrow money from lending banks, as follows:

• a. An MSME-member of a cooperative-member of the

CSF Cooperative;

• b. A cooperative that is a member of the CSF

Cooperative; or

• c. An NGO that is a member of the CSF Cooperative.

1.The minimum contribution

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each shall be P100,000.00. 2.Paid in full before the launching

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the CSF Cooperative

• r

upon admission as member. 3.Contributions shall be treated as investments. 4.1% of the contribution shall be booked as common shares and 99% Restricted Capital for Surety.

• 1. Contribution may be treated as investment or

grant.

• 2. In case of investment, the contribution shall be

booked as 1% preferred shares and 99% Restricted Capital for Surety.

• 3. If grant, it shall be booked as 100% Restricted

Capital for Surety.

• 4. The amount of initial contribution must be

equal to or more than the aggregate contributions

• f the participating cooperatives/NGOs.
• 5. The authorized representative shall become an

automatic member of the Board without voting rights (Ex-officio member)

• 6. Not qualified as borrower nor endorser of the

CSF Cooperative.

 Contribution may be treated as investment or grant.  In case of investment, the contribution shall be booked as

1% common shares and 99% Restricted Capital for Surety.

 If grant, it shall be booked as 100% Restricted Capital for

Surety.

 The amount of contribution may or may not be equal to

the total contributions

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the member- cooperatives/NGOs.

 The respective representatives shall sit as members of

the Board and shall have voting rights regardless of the nature of their contributions.

 Not qualified as borrower nor endorser of the CSF

Cooperative.

 Shall not exceed ten times the contributions of the

member/endorsing cooperative to the Fund at any given time.

 However,

if the borrower-cooperative has no endorser, the maximum loanable amount shall be five times the amount of its contribution.

The qualified borrower as defined in this Rules shall file application for business loan with surety cover, as follows:

 If the borrower is an MSME-member of a contributor-cooperative, the

loan application with surety cover together with the documentary requirements shall be filed with the contributor-cooperative.

 If the borrower is a cooperative/NGO without a qualified endorser,

the loan application with surety cover together with the documentary requirements shall be filed directly with the CSF Cooperative.

 If the borrower is a cooperative with a qualified endorser, the loan

application with surety cover together with the documentary requirements shall be filed with the contributor-cooperative of which it is a member.

The CSF Cooperative shall issue the Surety Agreement after the borrower

i) Has complied with all the terms and conditions of the

cooperative under which such loan was approved for endorsement to the bank;

ii) The bank’s notification for

its issuance has been received; and

iii)The CSF Cooperative’s share in the service fee has

been remitted to the Treasurer of the CSF Cooperative.

• ATTY. MONA LIZA P. ARRIBA-JUAREZ

Director, Credit Surety Fund Department Cooperative Development Authority Aurora Blvd., Cubao, Quezon City 0908-817-5870/0917-703-3472