The Bangko Sentral ng Pilipinas (BSP) and Agricultural Credit Policy Council (ACPC) listed 37 Rural Financial Institutions (RFIs) for agricultural lending as of the end of March this year.
The list included one more rural bank among its nine accredited RFIs at the end of January. The new addition is the Rural Bank of Solano in Nueva Vizcaya, located in the Cagayan Valley, which was accredited by BSP on March 3.
Other BSP-accredited RFIs include: Producers Savings Bank Corp. ; Common Wealth Rural Bank; Rural Bank of Angeles; New Rural Bank of San Leonardo; First Isabela Cooperative Bank; Cavite United Rural Bank Corp. ; Rang-Ay Bank; Bay Rural Bank; and Kiamba Rural Bank (Sarangani).
The BSP accreditation of the 10 rural banks is not an endorsement or confirmation by the central bank of the “strength” of the listed RFIs.
Accreditation serves only to announce that RFIs have complied with any of the provisions of the Agri-Agra Credit Reform Act 2009.
In the meantime, the ACPC has maintained its initial list of 27 accredited RFIs, identical to the list it announced last January.
BSP Deputy Governor Chuchi G. Fonacier, in a circular letter she signed on April 7, reiterated that “accreditation may not be used for any purpose other than for the implementation of the provisions of Agri-Agra Credit Reform Act 2009 and its related rules and regulations.”
Fonacier stated that the lending or investing bank is required to disclose in its Agri-Agra report to the BSP its exposure to accredited RFI and whether it intends to use its exposure for Agri-Agra compliance.
“In the event of deaccreditation, the lending/investing bank will only be permitted to use its exposure to a deaccredited RFI to comply with the agri-agra requirement until the next reporting quarter following deaccreditation as a grace period,” said declared Fonacier in the circular letter.
It also stated that in the event of deaccreditation, “the lending/investment bank will only be permitted to use its exposure to a deaccredited RFI to comply with the agri-agra requirement until the next reporting quarter following the deaccreditation as a grace period.”
The Agri-Agra Act requires banks to allocate at least 10% of total loanable funds to land reform beneficiaries and 15% to farmers and fishers.
However, the majority of banks do not comply with the law which obliges them to lend 25% of their total loan portfolio to the agricultural sector. Banks apparently prefer to pay the 0.5% penalty for non-compliance rather than set aside the mandatory amount due to the high risk and high cost of lending to the agricultural sector. Each year, the BSP collects about 2 billion pesos in fines from non-compliant banks. By law, penalties collected are remitted to the Agricultural Guarantee Fund Pool and the Philippine Crop Insurance Corp.
Last February, BSP Governor Benjamin E. Diokno said passage of amendments to the Agri-Agra Act will improve and expand access to credit for farmers, fishers, and micro, small, and medium enterprises. or MSMEs in the agriculture and agribusiness sector. sectors.
The proposed bill is one of PASB’s priority legislative measures as it aims to improve the creditworthiness of agricultural workers and their businesses by building their capacities, modernizing their business operations and integrating them into national value chains and profitable export-oriented.
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