Question & AnswerQ&A (Republic Act No. 10744)
The official title of Republic Act No. 10744 is the "Credit Surety Fund Cooperative Act of 2015."
The main purpose of establishing CSF Cooperatives is to manage and administer Credit Surety Funds to enhance the accessibility of micro, small, and medium enterprises (MSMEs), cooperatives, and nongovernmental organizations (NGOs) to the credit facilities of banks and to promote sustainable growth.
Qualified borrowers refer to MSME-members of a cooperative-member of the CSF Cooperative; cooperatives that are members of the CSF Cooperative; and NGOs that are members of the CSF Cooperative.
The CDA is the lead government agency responsible for the registration, regulation, monitoring, and supervision of CSF Cooperatives. It has the authority to formulate policies, set criteria, issue implementing rules and regulations, supervise activities, and impose sanctions for violations.
An MSME is defined as any business activity or enterprise engaged in industry, agri-business or services whose total assets fall under the following categories: Micro - not more than P3,000,000; Small - P3,000,001 to P15,000,000; Medium - P15,000,001 to P100,000,000. Classification is subject to periodic review by the MSMED Council.
CSF Cooperatives registered with the CDA shall enjoy the tax privileges granted to cooperatives under Republic Act No. 9520, the Philippine Cooperative Code of 2008. However, members of the CSF Cooperative which are not cooperatives are subject to regular taxes under the National Internal Revenue Code.
The maximum loan amount that may be borrowed by qualified borrowers shall not exceed ten (10) times their contributions to the Credit Surety Fund at any given time.
The CSF consists primarily of contributions from member-cooperatives/NGOs, counterpart contributions from Local Government Units (LGUs) in an amount at least equal to the member contributions, and contributions from Government Financial Institutions (GFIs) and other institutions or government agencies which may or may not match the total members' contributions.
The Board of Directors determines policies, acts as manager until trustee banks are designated, designates trustee banks, promulgates rules on contributions and admissions, enters into contracts, sues and is sued, reviews audits, creates committees, delegates powers, supervises affairs, issues surety agreements, and performs acts necessary for achieving the CSF purposes.
The BSP is tasked to promote and encourage the creation and organizational development of CSF Cooperatives, facilitate technical assistance such as training, assist the CDA in setting criteria and qualifications, and provide other assistance consistent with its mandate to enhance rural credit creation and inclusivity.