Laurent Agcaoili (The Philippine Star) – March 8, 2021 – 12:00 a.m.

MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) has relaxed compliance rules for land and agricultural reform loans as Philippine banks continue to fall below the prescribed threshold.

BSP Governor Benjamin Diokno issued Circular 1111 after the Monetary Board approved revised rules and regulations governing the compulsory allocation of credits under Republic 10,000, also known as the Credit Act of the Agri-Agra reform of 2009.

Banks are required to set aside at least 25 percent of their total loanable funds for agriculture, fisheries and general land reform credit, of which at least 10 percent of total loanable funds must be set aside. the disposal of beneficiaries of the agrarian reform (ARB), Households ARB or community of agrarian reform.

According to the revised guidelines, Diokno said that the excess compliance of the 10 percent land reform credit can be used to offset a deficit, if any, in other 15 percent agriculture and fisheries credits, but not the other way around.

Another permitted compliance alternative includes qualifying securities such as investments in bonds issued by the Development Bank of the Philippines and the Land Bank of the Philippines, investments in other debt securities used to finance activities under the Republic Act 8435 or the Agriculture and Fisheries Modernization Act of 1997, as well as a paid subscription for shares of accredited rural financial institutions, Philippine Crop Insurance Corp. (PCIC) and companies whose main activity is agriculture and fishing.

Other modes of compliance include rediscount facilities granted by major banks to other banks, including loans covered by PCIC guarantees, loans for construction and improvement of farm roads. to the market, and the provision of post-harvest facilities, loans to agri-business enterprises that maintain agricultural commodity supply chain agreements, as well as agricultural value chain finance.

Loans by Philippine banks for agriculture and land reform fell 2.8 percent to 713.6 billion pesos last year, from 733.92 billion pesos in 2019, as the industry continued to be below the threshold prescribed for the sector.

Total loanable funds generated by the banking sector jumped 15.7 percent to 7.14 trillion pesos last year, from 5.54 trillion pesos in 2019.

However, bank loans to the agricultural sector declined 3.6 percent to 666.69 billion pesos in 2020 for a compliance rate of 9.32 percent or below the required 15 percent.

Large banks or universal and commercial banks recorded a compliance rate of 9.01 percent after granting 608.9 billion pesos to the agricultural sector in 2020, while the ratio of savings or medium-sized banks n ‘reached only 6.4 percent after granting 18.1 billion pesos.

On the other hand, rural banks have granted 15.33 billion pesos to the agricultural sector for a compliance rate of 16.3 percent.

Likewise, the banking system’s compliance rate was well below the 10 percent threshold for land reform credit, as bank loans to the agricultural sector only increased by 5.9 percent to reach 55.84 billion pesos for a compliance rate of a measly 1 percent.

The compliance rate of large banks with land reform loans reached only 0.88%, while that of savings banks stood at 0.95%, as well as rural and cooperative banks at 9%. , 69%.

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