BANK loans to the agriculture and land reform sector increased 13.60% at the end of June this year, according to the Bangko Sentral ng Pilipinas (BSP), but have not reached the mandated amount.
As of the end of June 2021, the banking system had set aside 789.60 billion pesos for the sector, up 94.53 billion pesos from the 695.06 billion pesos a year earlier.
Total loanable funds increased 16.70% to 7.42 trillion pesos at the end of June this year, from 6.35 billion pesos a year earlier.
The combined allocation for agriculture and land reform, at 10.63 percent of total loanable funds, did not meet the 25 percent threshold set by Republic Act 10,000, or the “Law of the Republic. the credit of the Agri-Agra reform of 2009 ”.
Banks are required to lend 15 percent and 10 percent of their entire loan portfolio to farmers and land reform beneficiaries, respectively, under the law.
Lenders, on the other hand, gave the agriculture industry only 9.66 percent of their total loanable money, while land reform beneficiaries received only 0.96 percent of their money. total loanable.
Over an eight-year period, banks that failed to meet the compulsory credit allowance for agriculture and land reform were fined more than 13 billion pesos.
“We collected around 13.4 billion pesos in agro-agricultural penalties from 2011 to 2018,” noted Lyn Javier, director general of the policy and specialized supervision sub-sector of the BSP.
The Common Agricultural Guarantee Fund received 45 percent of the fines, said Javier, who provides guarantee coverage to banks, cooperatives, farmers / organizations and businesses financing small farmers and fishermen.
The same amount was sent to the Philippine Crop Insurance Corp., which provides insurance coverage for farmers (non-rice miles) and corn, among others, against natural disasters, plant diseases, and pest infestations.
BSP, meanwhile, received 1.34 billion pesos, or 10 percent of funds.
BSP Governor Benjamin Diokno said the central bank would continue to push for “structural reforms” that would strengthen rural development by offering a holistic approach that takes into account the broader agricultural finance ecosystem and community needs.