Financial institution loans to the agriculture and land reform sector fell 2.76 p.c on the finish of final yr, additionally beneath the prescribed threshold, in line with information from Bangko Sentral ng Pilipinas ( BSP).
The banking system put aside 713.599 billion pesos for the sector on the finish of 2020, down 20.32 billion pesos from 733.921 billion pesos on the finish of 2019.
Whole loanable funds climbed 15.59 p.c to 7.13 billion pesos on the finish of December, from 6.17 billion pesos a yr in the past.
The mixed allocation for agriculture and land reform – 10 p.c of complete loanable funds – was beneath the 25 p.c threshold set by Republic Act (RA) 10,000 or the “Reform Credit score Act. Agri-Agra of 2009. »
By legislation, banks are required to increase 15 p.c and 10 p.c of their complete mortgage portfolio to farmers and land reform beneficiaries, respectively.
Banks supplied solely 9 p.c of their complete loanable funds to the agricultural sector. Throughout this time, they allotted only one p.c of their complete loanable funds to land reform beneficiaries.
BSP pushed for the modification of RA 10000, which Bangko Sentral Governor Benjamin Diokno mentioned will strengthen rural improvement by offering a holistic strategy that takes under consideration the broader agricultural finance ecosystem and desires. from the neighborhood.
“It responds to the challenges that the agricultural sector faces in accessing finance,” he mentioned.
Particularly, the central financial institution needs to permit banks to take a position a part of their mandated portfolio in inexperienced initiatives.
“The plan is to broaden the listing of eligible initiatives for banks beneath the legislation, for instance, to inexperienced initiatives and investments in rural communities,” Diokno mentioned.
Banks discover it tough to achieve the complete 25% threshold in the event that they solely lend to the agro-agricultural sector, he added.
Apart from native lenders, the BSP chief mentioned overseas banks working within the nation had been struggling to satisfy the agro-agricultural lending threshold.
To assist the banking sector attain the edge, he added that the central financial institution was exploring methods to conform.
“We’ve so many initiatives they will fund, similar to inexperienced infrastructure initiatives and people to strengthen the nation in opposition to pure disasters. We want extra funding in these areas, ”Diokno burdened.