The Bangko Sentral ng Pilipinas (BSP) is planning the repeal of the Agri-Agra Act as the bicameral Congressional Conference Committee has ratified a new bill aimed at improving the financing of the agri-fishing sector and the rural development.
PASB said in a statement that the 2022 Strengthening Agriculture, Fisheries and Rural Development Finance Bill will soon be forwarded to Malacañang for signature by the President, and is expected to release funds for the agricultural finance ecosystem and for rural community development needs.
Agri-Agra or Republic Act No. 10000 requires all government and private banking institutions to allocate at least 25% of their total loanable funds to agriculture and land reform beneficiaries (ARBs).
In particular, 15% of loanable funds must be allocated to the agricultural sector and 10% to ARBs.
“BSP has long pushed for the repeal of [RA 10000] to make it more responsive to the financing needs of farmers, fishers and agricultural micro, small and medium enterprises,” said BSP Governor Benjamin Diokno.
Diokno said the repeal of RA 10000 was aimed at providing more capacity to farmers and fishers, modernizing their operations and integrating them into profitable domestic and export-oriented value chains.
“Expanding the available modes of compliance with agricultural sector financing requirements will promote the financing of green finance projects, income-generating activities and public infrastructure projects, to the benefit of rural land reform and the agricultural sector. “Diokno said.
The new bill removes the distinction between 10% land reform and 15% agricultural credit. This should give banks greater flexibility in extending credit to the agriculture and land reform sectors according to their capabilities.
In addition, banks that cater to ARBs and Agrarian Reform Communities will be able to allocate the entire 25% compulsory credit quota to that sector, instead of just 10%.
Meanwhile, banks that are unable to lend directly to beneficiaries in rural communities can contribute in other ways, such as debt and equity investment, agricultural value chain financing and lending to agribusinesses to finance agricultural and community activities.
In addition, the new bill encourages funding for environmentally sustainable projects that will help mitigate the impact of climate risk on the agricultural sector.
—RONNEL W. DOMINGO
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