THE BANGKO SENTRAL ng Pilipinas (BSP) has expanded further the type of loans counted as compliance with the mandatory credit allocation for agriculture and agrarian reform activities.
“This is an interim measure while awaiting the amendment of Republic Act (RA) 10000 (Agri-Agra Reform Credit Act of 2009) itself,” Monetary Board member V. Bruce J. Tolentino said in a Twitter message.
Circular No. 1111 signed by BSP Governor Benjamin E. Diokno on March 3 said loans for activities involved in the agricultural value chain from farming, fishing, as well as other processes involved in converting an agricultural product from raw material to its consumption form will now be counted as agri-agra credit.
This means even loans to businesses related to input production, farm and fishery operations and management, equipment and supplies manufacturing, food processing, trading, and retailing will also be qualified as compliance with the Agri-Agra law.
The central bank also expanded its definition for agrarian reform beneficiaries to include communities and integrated development made up of farmers that were granted land or benefited from redistributed land through previous agrarian reform programs.
Loans to surviving family members in case initial beneficiaries die or are already incapable to manage awarded land are also included in the revised measure.
Moreover, bonds issued by banks whose proceeds will finance lending to agrarian reform beneficiaries will also be counted as part of the agrarian reform credit quota.
“The amendments to the implementing rules and regulations of RA No. 10000 is expected to mobilize financing toward the agri-agra sector since it expands avenues for compliance by a bank within the legal ambit of RA No. 10000,” BSP Deputy Governor Chuchi G. Fonacier said in a text message.
House Bill No. 6134 was passed on third reading in March 2020 and has already been transmitted to the Senate. Its counterpart Senate Bill 1924 is pending in the committee level.
As of December, banks disbursed loans worth P642.371 billion as part of their compliance for the agricultural segment of the Agri-Agra law, BSP data showed. This is only 9% of their P7.136 trillion loanable funds, short of the 15% minimum requirement.
Compliance for the agrarian reform segment meanwhile stood at P71.228 billion, only 1% of their loanable funds and also lower than the 10% minimum. — Luz Wendy T. Noble
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