More micro, small, and medium enterprises (MSMEs) in the Philippines are expected to gain improved access to credit through the ongoing Credit Risk Database (CRD) project led by the Japan International Cooperation Agency (JICA) and the Bangko Sentral ng Pilipinas (BSP).
The initiative, now in its second phase, aims to address long-standing financing challenges faced by MSMEs, which make up 99.63% of business organizations in the country but contribute only 35.7% to total value-added, according to the Philippine Statistics Authority.
Launched in 2020, the CRD project bridges the financing gap by promoting risk-based lending over traditional collateral-based methods that often disadvantage MSMEs. The CRD scoring model evaluates the creditworthiness of enterprises using anonymized financial data contributed by participating financial institutions.
“This concerted action by those financial institutions signifies their strong trust and confidence in BSP as the very reliable leader of the Philippine banking sector,” said JICA Philippines Chief Representative Takema Sakamoto.
To date, 33 financial institutions have joined the project, reflecting growing support for sustainable financing solutions. The CRD model is inspired by Japan’s own system, which holds anonymized data from over three million SMEs and is used by more than 165 institutions. The Philippines is the first country to adopt this approach outside Japan.
BSP Governor Eli Remolona, during the ceremonial launch of Phase II, highlighted the alignment of the project with the Philippine government’s digital transformation initiatives, as the CRD digitally stores financial records for analysis.
Despite the positive developments, Sakamoto stressed the need for further reforms to enhance financial inclusion. “We still need to do more to promote risk-based lending, rather than just relying on conventional collateral-based lending, to enhance financial inclusion of SMEs,” he said.
Phase II aims to refine the CRD scoring model, expand the participation of financial institutions, and strengthen the sustainability of the database. Sakamoto underscored the importance of maintaining robust systems and ensuring data accuracy to build trust among users.
“We have to maintain the robustness of the database through creating a secured environment and convenient data provision mechanism for our partner financial institutions,” he said.
Additionally, discussions are underway to establish a permanent Credit Risk Database Operation Entity (COE) to sustain the project’s services in the long term.
“We would encourage establishing, during this second phase, a permanent operating body that is a CRD Operation Entity (COE), which will operate and maintain the CRD services in the Philippines,” Sakamoto said.
The event was attended by BSP Monetary Board Members Jose Querubin and Romeo Bernardo, BSP Deputy Governors Bernadette Romulo-Puyat and Francisco G. Dakila Jr., and Embassy of Japan Minister for Economic Affairs Daisuke Nihei.
As the project progresses, JICA remains committed to supporting financial inclusion. “That is the reason why JICA is here with you. Nonetheless, we believe that key reforms, particularly our CRD project, can revolutionize the banking sector,” Sakamoto said. Veronica Uy
