The Bangko Sentral ng Pilipinas (BSP) and the Agricultural Credit Policy Council (ACPC) have listed 37 rural financial institutions (RFI) for agri-agra lending as of end March this year.
The list included one more rural bank from its end January accredited RFIs of nine. The new addition is Rural Bank of Solano in Nueva Vizcaya, located in the Cagayan Valley which was accredited by the BSP last March 3.
The other BSP-accredited RFIs are the following: Producers Savings Bank Corp.; Common Wealth Rural Bank; Rural Bank of Angeles; New Rural Bank of San Leonardo; First Isabela Cooperative Bank; Cavite United Rural Bank Corp.; Rang-Ay Bank; Rural Bank of Bay; and Rural Bank of Kiamba (Sarangani).
The BSP accreditation of the 10 rural banks are not endorsements or the central bank’s confirmation of the “soundness” of the listed RFIs.
The accreditation is only to announce that the RFIs have complied with one of the provisions of the Agri-Agra Reform Credit Act of 2009.
Meantime the ACPC has maintained its original list of 27 accredited RFIs, same as the list it announced last January.
BSP Deputy Governor Chuchi G. Fonacier, in a circular letter she signed on April 7, reiterated that the “accreditation cannot be used for any purpose other than for implementing the provisions of the Agri-Agra Reform Credit Act of 2009 and its related rules and regulations.”
Fonacier said the lending or investing bank is required to disclose in its Agri-Agra Report to the BSP of its exposure to the accredited RFI and if they intend to utilize its exposure for Agri-Agra compliance.
“In the event of disaccreditation, the lending/investing bank will be allowed to use its exposure to a disaccredited RFI for compliance with the agri-agra requirement only up to the next reporting quarter following the disaccreditation as a grace period,” said Fonacier in the circular letter.
She also said that in the event of disaccreditation, “the lending/investing bank will be allowed to use its exposure to a disaccredited RFI for compliance with the agri-agra requirement only up to the next reporting quarter following the disaccreditation as a grace period.”
The Agri-Agra law mandates banks to allot at least 10 percent of total loanable funds for agrarian reform beneficiaries and 15 percent for farmers and fisherfolk.
However majority of banks do not comply with the law that mandates them to lend 25 percent of its total loan portfolio to the agriculture sector. Banks apparently prefer to pay the 0.5 percent penalty for the non-compliance rather than set aside the mandatory amount due to the high risk and high cost of lending to the agriculture sector. On a yearly basis, the BSP collects about P2 billion in fines from non-complying banks. Under the law, penalties collected are remitted to the Agricultural Guarantee Fund Pool and Philippine Crop Insurance Corp.
Last February, BSP Governor Benjamin E. Diokno said that the passage of amendments to the Agri-Agra law will improve and expand the credit access of farmers, fisherfolk, and micro, small, and medium enterprise or MSME in the agriculture-related and agribusiness sectors.
The proposed bill is one of BSP’s priority legislative measure since it seeks to improve the creditworthiness of agricultural workers and their enterprises by enhancing their capabilities, modernizing their business operations, and integrating them into profitable domestic and export-oriented value chains.