FUNDS for lending to the agriculture and agrarian reform sectors increased by 21.36% at the end of September, but did not reach the level required by law, data from the Bangko Sentral ng Pilipinas (BSP).
The banking system had reserved 804.17 billion pesos for the sector as of September 30, 2021, up 141.55 billion pesos from 662.62 billion pesos a year ago.
At 10.73% of total loanable funds, however, the combined allocation for agriculture and land reform was well below the 25% set under Republic Act 10000 or the agro-agricultural reform of 2009″.
Banks must lend respectively 15% and 10% of their total loan portfolio to farmers and agricultural reform beneficiaries.
However, the actual percentages were only 9.81% for farmers and 0.92% for land reform beneficiaries.
Banks that failed to comply with the mandatory credit allocation for agriculture and agrarian reform were fined more than 13 billion pesos, BSP said earlier, the general manager of the sub-sector of Policy and Specialized Supervision, Lyn Javier, noting that “we collected about 13.4 pesos. billion in agri-agra fines from 2011 to 2018.”
The Agricultural Guarantee Fund Pool, which provides guarantee coverage to banks, cooperatives, farmers/organizations and businesses supporting smallholder farmers and fishers, received 45% of the fines, she added.
The same percentage was transferred to Philippine Crop Insurance Corp. while the central bank received the remaining 10%.
BSP Governor Benjamin Diokno said regulators would continue to advocate for “structural reforms” that take into account the broader agricultural finance ecosystem as well as community needs.