Improve farmers’ credit access, BSP urged

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The Bangko Sentral ng Pilipinas (BSP) should crack the whip on banks to make them provide accessible credit schemes for farmers, Rep. LRay Villafuerte said Sunday.

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The Camarines Sur lawmaker noted that access to agriculture and agrarian reform loans are provided for under the Agri-Agra law.

“I understand that banks have a hard time complying with the provisions of the law because of the credit worthiness of our farmers, who cannot meet the collateral requirements for loan applications. As such, the BSP should allow more alternative ways for banks to comply with the Agri-Agra Law to encourage these institutions to lend more to the agriculture sector instead of merely paying fines for their continued non-compliance,” Villafuerte said in a statement.

Under the Agri-Agra Law, 25 percent of the banks’ total funds for loan must be set aside for agriculture and fisheries, of which at least 10 percent have to be made available to agrarian reform beneficiaries.

Villafuerte said the BSP should consider the recommendation of the Bankers’ Association of the Philippines to allow banks to enter into public-private partnerships or PPPs, provided that these are for projects that will benefit the agriculture sector.

Based on BSP records, loans extended by banks to the agriculture sector in the first nine months of 2016 amounted to P405.78 billion, good only for a 12.96 percent compliance ratio or below the required 15 percent.

The compliance ratio of the banking system to the law’s requirement was a mere 0.96 percent, far from the 10 percent threshold for agrarian reform credit.

“Banks, even rural banks, do not accept Certificates of Land Transfer as collateral. As such, the government should take initiatives to strengthen the farm sector and stabilizing food prices for the benefit of low-income Filipinos in the countryside where poverty is widespread and where agriculture is the primary means of livelihood,” Villafuerte said.

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