Section 18May 23, 2008, Sec./Art. 18

Section 13 of the same Act, as amended, is hereby renumbered as Section 15, and further amended to read as follows:

"SEC. 15. Mandatory Allocation of Credit Resources to Micro Small and Meduim Enterprises. - For the period of ten (10) years from the date of the effectivity of this amendatory Act, all lending institutions as defined under Bangko Sentral ng Pilipinas rules, whether public or private, shall set aside at least eight percent (8%) for micro and small enterprises of their total loan portfolio based on their balance sheet as of the end of the previous quarter, and make it available for MSME credit as herein contemplated.

"Compliance of this provision shall be:

"a) actual extension of loans to eligible MSMEs; or

"b) actual subscription of preferred shares of shares of stock of the SB Corporation; or

"c) wholesale lending to Participating Financial Institutions (PFIS) for on-lending to MSMEs; or

"d) purchase/discount of MSMEs receivables; or

"e) loans granted to export, import, and domestic traders subject to compliance with Section 3 of this Act; or

"f) subscribed/purchase of liability instruments as may be offered by the SB Corporation.

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

"The MSMED Council shall set up the appropriate systems to monitor all loan applications of MSMSEs in order to account for the absorptive capacity of the MSME sector.

"The Bangko Sentral ng Pilipinas shall furnish to the MSMED Council on a quarterly basis comprehensive reports on the banks' compliance, noncompliance and penalties of the above provisions on the mandatory credit allocation for MSMEs.

"Lending institutions which are not qualified to acquire or hold lands of the public domain in the Philippines shall be permitted to bid and take part in sales of mortgaged real property in case of judicial r extra-judicial foreclosure, as well as avail of receivership, enforcement and other proceedings, solely upon default of a borrower, and for a period not exceeding five (5) years from actual possession: Provided, That in no event shall title to the property be transferred to such lending institution. If the lending institution is the winning bidder, it may, during said five (5) year period, transfer its rights to a qualified Philippine national, without prejudice to a borrower's right under applicable laws."