The Bangko Sentral ng Pilipinas (BSP) has issued a circular requiring Land Bank of the Philippines (LandBbank) to allocate at least five percent of its loan portfolio for socialized credit to small farmers, fisherfolk and agrarian reform beneficiaries, as per the law that mandated it.
BSP Circular No. 1090, signed recently by BSP Governor Benjamin E. Diokno, contained the implementing rules and regulations (lRR) of Republic Act No. 10878, or the “Act Strengthening and lnstltutionalizing Direct Credit Support of the Land Bank of the Philippines to Agrarian Reform Beneficiaries, Small Farmers and Fisherfolk” which amended RA No. 3844 (“Agricultural Land Reform Code”).
The circular said the government bank will release the loans for socialized credit via qualified conduits.
It said Landbank “may offer and issue common and preferred shares of stocks to agrarian reform beneficiaries, small farmers and fisherfolk through their organizations, cooperatives; federations and cooperative banks; development partners and strategic investors such as multilateral and bilateral institutions; and ruralcbanks and their associations.”
As a transitionary provision, the BSP is giving Landbank six months from the effectivity of the IRR to comply.
Under the socialized credit facility, the IRR specified that “credits extended to the beneficiaries named under this socialized credit facility will be based on the feasibility of the project and their paying capacity, their estimated production, and/or securities they can provide, as well as assets as may be acquired by them from the proceeds of the loans.”
“This facility will be funded through the operations of Landbank itself and will not require additional government funding,” according to the IRR, and that “all loans extended through this special socialized credit facility shall qualify as part of Landbank’s direct compliance with the mandatory agricultural and agrarian reform credit.”
Also, the IRR pointed out that the “base amount for purposes of determining compliance with the five percent allocation is the regular loan portfolio reported as of the end of the previous quarter.”