Fil C. Sionil
The Bangko Sentral ng Pilipinas (BSP) has its plate full. Aside from its difficult balancing act to keep tabs on inflation, perking to help sustain the wheels of the domestic economy churning, BSP is also finding ways to further strengthen the banking industry and ease lending business.
The BSP, Governor Benjamin E. Diokno said will be submitting to the 18th Congress proposed legislative measures to “further enhance access to quality financial products and espouse the interests of the general public.” These include the Financial Consumer Protection bill which aims to provide a comprehensive financial consumer protection regime that consolidates financial inclusion, financial education, good governance, and effective supervision for the protection of the consumers; and reforms in Agricultural Financing to amend the Agri-Agra Reform Credit Act of 2009 (Republic Act No. 10000) to allow banks to merge their loan allocation to the farm sector as a measure to improve banks’ compliance rate.
Action on these proposed measures appears to be a daunting task, considering that the grinding of the legislative mills leans towards such critical issues as concerns on traffic, controversies hounding the delivery of basic services, specifically transportation. These problems, unresolved, will negatively impact the churning of the domestic economy.
All things considered, though, assisting rice growers by amending the agri-agra law is crucial at this point in time. Farmers badly need financial assistance. The price of their produce plummeted significantly because of the Rice Tariffication Law that liberalizes the importation and exportation of rice, as well as removing the quantitative import restrictions on this commodity early in the year.
Lending to the agri-agra sector is less desired because of the inherent risk. Banks would rather pay the penalty. Thus, the monetary authorities are looking for ways to improve compliance. There are 40 funding facilities for the sector, handled by a number of government agencies –the Departments of Agriculture (DA) and Trade and Industry (DTI), and the Land Bank of the Philippines.
“The BSP is working on a proposal to strengthen lending to the sector by consolidating under one roof the lending program,” explains Monetary Board member Bruce Tolentino. A case in point here is the Rice Competitiveness Enhancement Fund (RCEF) worth ₱10 billion tacked-in the rice tariffication program. However, it was learned that the DA National Rice Program had already used up P5-billion RCEF last year even before the enforcement of the law.
The aspiration is credit mobilization. Increase the appetite of banks to lend to the risky, weather-dependent sector of the economy. MBM Bruce is in charge of crafting the harmonious consolidation measure to maximize assistance and lessen the risk to the lenders.
It has to be comprehensive, a multi-party approach. Banks and the national government, share a portion of the load. The use of key performance indicators as a gauge for additional funding is necessary. The farmers must also take seriously on their responsibility as borrowers.
Will keep you posted on the churning of the legislative wheels.
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