The Bangko Sentral ng Pilipinas (BSP) will issue new reporting rules on banks’ mandatory agriculture, fisheries and rural development (AFRD) financing. A draft circular amending the implementing rules and regulations (IRR) and prudential reports relative to AFRD financing has been released to the banking public. The BSP wants banks to submit comments and other feedback by March 27. The proposed rules on reporting AFRD loans include reporting period, timelines, and clarification as well as changes to terms, accounts and instructions on reporting in compliance to the IRR. Last November 2022, the BSP’s Monetary Board approved the IRR requiring all banks to allocate 25 percent of their total loanable funds for AFRD financing under Republic Act No. 11901 or “The Agriculture, Fisheries and Rural Development Financing Enhancement Act of 2022”. BSP Governor Felipe M. Medalla said Circular No. 1159, which sets the rules on the 25 percent requirement for AFRD financing, will be mandated for 10 years. However, for banks that have just been established, they will be exempted from the required allocation for a period of five years. By BSP definition, newly-created banks are local or foreign banks whose first five years of operation ended on Aug. 18, 2022. AFRD financing are loans and investments for productivity and intended to “increase (the) income of an agricultural and fisheries household, thereby promoting agricultural sector productivity and competitiveness, as well as sustainable development of rural communities.” Before RA 11901, banks are mandated to set aside 10 percent of their lending portfolio for agrarian reform beneficiaries and 15 percent for agricultural activities. Under the new law, banks are provided with “greater flexibility” in allocating the combined 25 percent mandatory credit quota to a range of borrowers in the agriculture, fisheries, and agrarian reform sectors. Banks that have failed to comply or under-complied with the required AFRD financing will be penalized with an annual monetary charge of 0.5 percent to be computed on a quarterly basis. Medalla said all banks are expected to design and offer financial products and services that suit the specific requirements of rural community beneficiaries, taking into account their cash flows and the gestation and harvest period of the agricultural, fishery or rural produce, activity or project being financed. The government’s two state banks, Land Bank of the Philippines and the Development Bank of the Philippines, in consideration of the new law, will continue to apply low interest rates for loans under AFRD financing.