February 13, 2022 | 00:00
MANILA, Philippines – The Bangko Sentral ng Pilipinas (BSP) says farmers, fishers and micro, small and medium enterprises (MSMEs) in the agriculture, agribusiness and related sectors should be given a bullet in arm once amendments to the prescribed thresholds for agriculture and land reform loans are enacted.
BSP Governor Benjamin Diokno made the statement after the Senate approved Senate Bill 2494 or amendments to Republic Act 10000 or the Agri-Agra Credit Reform Act of 2009 on 2 February.
The House of Representatives approved his version via Bill 6134 at third and final reading in March 2020.
The next step in the legislative process is the bicameral procedure.
“The Agri-Agra Bill will strengthen rural development through a holistic approach to meeting the financing needs of the agricultural finance ecosystem,” Diokno said.
A priority legislative measure of BSP, the proposed amendments to the Agri-Agra Bill aim to improve the creditworthiness of agricultural workers and their enterprises by building their capacities, modernizing their business operations and integrating them into national and oriented value chains. profitable export. .
Under the current law, banks are required to set aside 15% of total loanable funds for agriculture and an additional 10% should be made available to land reform beneficiaries, as required by presidential decree. 717.
At the end of September last year, loans disbursed by the banking sector for agriculture and land reform jumped 21.4% to 804.16 billion pesos from 662.62 billion. pesos over the same period in 2020, but the sector continued to fall short of the prescribed threshold. for the sector.
BSP data showed that the banking system was only able to allocate around 10.73% of its total loanable funds during the nine-month period, well below the 25% threshold.
Total loanable funds generated by Philippine banks increased by 15% to P7.49 trillion at the end of September last year from P6.51 trillion at the end of September in 2020.
According to the BSP, loans granted by banks to the agricultural sector jumped by 21.2% to reach 735.24 billion pesos against 606.79 billion pesos for a compliance rate of 9.81% or less than 15%. required.
On the other hand, loans for agrarian reform granted by banks also jumped by 23.4% to 68.93 billion pesos against 55.84 billion pesos. However, the amount was still below the prescribed 10% with a compliance rate of only 0.77%.
The BSP said earlier that banks have been paying about 2 billion pesos on average in penalties per year since 2011 due to their failure to comply with the Agri-Agra law. In fact, the industry paid 13.4 billion pesos between 2011 and 2018 to settle the fines.