An Act Providing for the Creation and Organization of 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 organizational 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 of 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 other 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 operation 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 ocular inspection of projects financed through the CSF; b) Maintain a public registry of participating cooperatives/NGOs and lending banks; and c) Perform all other relevant functions and responsibilities as may be determined by the CDA.
ORGANIZATIONAL DEPARTMENT STRUCTURE DIRECTOR ADMIN ASSISTANT CHIEF CHIEF SUPERVISING CDS SUPERVISING CDS SENIOR CDS SENIOR CDS SENIOR CDS CDS II CDS II CDS II CDS I CDS I CDS I 15 EOs
(a) Spearhead the promotion, encouragement, creation and organizational development of CSF Cooperatives all over the country; b) Facilitate the acquisition by CSF Cooperatives of technical assistance such as trainings and seminars in coordination with other public or private stakeholders for purposes of the CSF; and c) Assist the CDA in setting the criteria and qualifications for CSF Cooperatives, and provide such other 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 other 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 of 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 of Registration and Certificate of 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 or any other cooperative dispute filed with the CDA or any court or tribunal.
Non-stock, non profit organizations duly registered with the Securities and Exchange Commission (SEC), focusing on the upliftment of the basic or disadvantaged sectors of society by providing advocacy, training, community organizing, 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 of the member- cooperatives/NGOs, GFIs and other 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 of 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 of each shall be P100,000.00. 2.Paid in full before the launching of the CSF Cooperative or 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.
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