Favila eyes telecom firms as conduits for small market vendor loans
Trade and Industry Secretary Peter B. Favila is exploring the possibility of tapping the country’s telecommunications firms, specifically Smart Communications as conduits for releasing small market vendor loans amounting to anywhere from P5,000 to P15,000.
In a briefing with reporters, Favila said that he has started initial talks with Smart regarding the possibility of facilitating the release of loans of small market vendors through Smart’s "Padala" program.
Borrowers would be notified about the release of their small loans via Smart SMS (short message system).
The borrower would then proceed to any Smart Padala center to get their funds.
The use of the SMS system is part of Favila’s overall plan of extending more financing access to small market vendors.
Favila has already approached the Bangko Sentral ng Pilipinas (BSP) about possible ways of extending financing access and liberalize loan documentation requirements for small market vendors to enable the wet market retailers to lower the cost of their capital outlay.
Following his wet market visits, Favila learned that most small market vendors rely primarily on so-called "5-6" loan sharks because they are not required to submit and deal with tedious loan documentation requirements.
However, because of the high interest cost of their "5-6" borrowings, Favila said, the small retailers have to pass on the cost to the consumers, resulting in higher prices.
"If we could only lower the capital cost of the vendors," Favila said, "we could help mitigate the rise in prices of basic goods."
Favila clarified that the role of the Department of Trade and Industry (DTI) is not to control prices, but rather to mitigate the increases.
To help the small market vendors and ultimately the consumers, Favila has broached to BSP Governor Amando Tetangco Jr. the possibility of giving the wet market retailers access to the government’s already existing micro-finance and small and medium enterprises lending windows.
Favila said most of the small wet market vendors do not have the proper documentation required even by the micro-financing and SME financing program.
Favila is, therefore, trying to brainstorm with Tetangco on how loan documentation requirements could be eased for the small market vendors.
In a separate interview with Tetangco, the BSP Governor cautioned against raising the expectation of small market vendors over Favila’s proposed financing access.
Ever the conservative banker, Tetangco stressed on the need to be prudent about such financing arrangements.
In a briefing with reporters, Favila said that he has started initial talks with Smart regarding the possibility of facilitating the release of loans of small market vendors through Smart’s "Padala" program.
Borrowers would be notified about the release of their small loans via Smart SMS (short message system).
The borrower would then proceed to any Smart Padala center to get their funds.
The use of the SMS system is part of Favila’s overall plan of extending more financing access to small market vendors.
Favila has already approached the Bangko Sentral ng Pilipinas (BSP) about possible ways of extending financing access and liberalize loan documentation requirements for small market vendors to enable the wet market retailers to lower the cost of their capital outlay.
Following his wet market visits, Favila learned that most small market vendors rely primarily on so-called "5-6" loan sharks because they are not required to submit and deal with tedious loan documentation requirements.
However, because of the high interest cost of their "5-6" borrowings, Favila said, the small retailers have to pass on the cost to the consumers, resulting in higher prices.
"If we could only lower the capital cost of the vendors," Favila said, "we could help mitigate the rise in prices of basic goods."
Favila clarified that the role of the Department of Trade and Industry (DTI) is not to control prices, but rather to mitigate the increases.
To help the small market vendors and ultimately the consumers, Favila has broached to BSP Governor Amando Tetangco Jr. the possibility of giving the wet market retailers access to the government’s already existing micro-finance and small and medium enterprises lending windows.
Favila said most of the small wet market vendors do not have the proper documentation required even by the micro-financing and SME financing program.
Favila is, therefore, trying to brainstorm with Tetangco on how loan documentation requirements could be eased for the small market vendors.
In a separate interview with Tetangco, the BSP Governor cautioned against raising the expectation of small market vendors over Favila’s proposed financing access.
Ever the conservative banker, Tetangco stressed on the need to be prudent about such financing arrangements.
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