Villar pushes for amendments to agri-agra law

Paolo Romero – The Filipino Star

January 31, 2022 | 00:00

MANILA, Philippines — Senator Cynthia Villar is pushing for changes to the Agri-Agra Credit Reform Act to help expand financing to farmers and fishers as well as micro, small and medium enterprises (MSME) related by allowing banks to extend more easily -cost of loans.

Villar, who chairs the Senate Agriculture and Food Committee, last week sponsored the amendments proposed in plenary and urged his colleagues to approve them immediately.

She said Republic Act 10000 should be amended to make it more effective in reaching the agricultural sector and promoting rural development.

According to data from the Bangko Sentral ng Pilipinas (BSP), banks paid an average of 2 billion pesos in penalties a year for non-compliance, she said.

Banks extended a total of 713.6 billion pesos in agricultural credit as of the end of December 2020, she said.

Agricultural loans amounting to 642.4 billion pula represent only 9% of the 15% compliance requirement for agricultural credit, while land reform credit granted by banks amounting to 71 .2 billion pula is only one percent compliance against the 10% requirement. requirement under RA 10000.

She said among the obstacles to compliance are limits on lending to activities purely related to agricultural production and targeted borrowers are limited to farmers and land reform beneficiaries only.

Villar said the bill leaves more leeway for banks to achieve a holistic approach to rural development, including removing the distinction between 15% for agriculture and 10% for reform beneficiaries. agrarian (ARB) in bank portfolios; and expanding the list of loan recipients and activities that can be financed by bank loans or investments, and welcoming other alternative compliance modes.

Under the bill, all banks, whether public or private, with the exception of newly established banks from the entry into force of the law, must reserve a credit quota of at least 25 % of their total loanable funds for agricultural loans.

For newly created banks, a grace period of five years is granted during which no penalties will be imposed.

Loans will now cover all activities, including activities complementary to or related to agriculture and fishing to increase agricultural production to improve the welfare of farmers and fishers.

Members of farming families, agricultural workers, their associations and organizations and their MSMEs can now benefit from these loans.

Environmental projects such as privately funded and LGU-funded irrigation systems, climate change mitigation, biodiversity protection, and renewable energy projects should be included.

Loans for the construction and upgrading of infrastructure, including but not limited to roads linking farms to markets, as well as post-harvest facilities, are considered to benefit rural communities.

The amendments are also intended to facilitate the access of private companies engaged in agricultural activities and the financing of these loans.

The bill also included special loan agreements for agribusinesses with qualified agricultural borrowers and agricultural value chain financing, which covers not only production but also distribution, manufacturing and processing of agricultural products.

The authorized loans are those requested by all kinds of financial institutions operating and located in rural municipalities and not only rural financial institutions.

Projects that promote livelihoods, skills enhancement and capacity building activities consistent or analogous to the above will also be recognized.

A special fund will be created from the penalties collected from banks unable to grant loans in accordance with the provisions of the new law, less 25% for the general fund and 10% for the BSP to cover administrative costs.

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