Section 9May 6, 1997, Sec./Art. 9

Sec. 13 of Republic Act No. 6977 is hereby amended to read as follows:

"SEC. 13. Mandatory Allocation of Credit Resource to Small and Medium Enterprises. - For the period of ten (10) years from the date of the effectivity of this Act, all lending institutions as defined under Bangko Sentral ng Pilipinas rules, whether public of private, shall set aside at least six (6%) and at least two percent (2%) for small and medium enterprises, respectively, of their total loan portfolio based on their balance sheet as of the end of the previous quarter, and make it available for small and medium enterprises credit as herein contemplated.

"The Bangko Sentral ng Pilipinas, in consultation with the Council, shall formulate rules for the effective implementation of this provision: Provided, That the purchase of government notes, securities and other negotiable instruments, with the exemptions of such instruments as may be offered by the SBGFC which do not pay market rates, shall not be deemed compliance with the foregoing provision: Provided, further, That the Bangko Sentral ng Pilipinas shall establish an incentive program to encourage lending to small and medium industries beyond mandatory credit allocation to said enterprises, such as possible reduction in bank's reserve requirement.

"The SMED Council shall set up the appropriate systems to monitor all loan applications of small and medium enterprises in order to account for the absorptive capacity of the small and medium enterprises sector.

"The Bangko Sentral ng Pilipinas shall require lending institutions covered by this Act to furnish to the Small and Medium Enterprise Development Council on a quarterly basis regular reports on their compliance with the above provisions on the mandatory credit allocations for small and medium enterprises and expeditiously act on the Council's reports of non-compliance therewith."