• Rural banks help farmers, fishers start anew

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    DAMAGE to agriculture in areas affected by Typhoon Lando (international name: Koppu) has climbed to over P6 billion. According to the Department of Agriculture (DA), the rice subsector was worst hit, with about 383,668 metric tons of rice production lost, equivalent to P5.7 billion in losses. Thousands of farmers found their hectares of crops, most of them nearly ready for harvesting, destroyed.

    Now the question is: How will the farmers start farming again especially if they do not have any more capital?

    Reports of loan sharks taking advantage of the situation, offering financing to farmers with up to 25 percent interest per month, have created concern in the rural banking industry.

    Resorting to loan sharks for their financing does not only hurt farmers but the majority of the marginalized sector as well, which is the focus of the financial inclusion program. As rural folk get snared into the loan sharks’ schemes, the harder it will be for them to recover from debt, and the higher the poverty incidence is likely to go.

    The Rural Bankers Association of the Philippines (RBAP) is urging its member banks to further strengthen their lending programs for the agriculture sector to encourage more borrowers and to dissuade rural folk from availing of illegitimate loan sources.

    Through the mandatory Agri-Agra law, which requires banks to lend 25 percent of their portfolio for agriculture and agrarian projects, rural banks are able to extend their services in the countryside to help finance farmers and fisherfolk.

    First-quarter data from the Bangko Sentral ng Pilipinas showed that rural and cooperative banks are taking the Agri-Agra law seriously by providing credit to the sector well beyond the levels required.

    In the first quarter, rural and cooperative banks extended 34 percent and 17 percent of their loans, respectively, to the agri-agra sector, way above the 15 percent and 10 percent required.

    The industry also generated a total of P55.2 billion in total loanable funds at the end of the first quarter, while total compliance on Agri-Agra credit grew by 8.3 percent to 28.3 percent for the first quarter this year compared to 19.9 percent in the first quarter of 2012.

    Besides agri-agra loans, 13 cooperative banks, 11 of which are RBAP members, were also tapped in another program to provide P300 million worth of credit to unbanked and underbanked small farmers.

    These banks are: First Isabela Cooperative Bank, Cooperative Bank of Cotabato, Cooperative Bank of Misamis Oriental, Bukidnon Cooperative Bank, Ilocos Sur Cooperative Bank, Cooperative Bank of Ilocos Norte, Cooperative Bank of Bohol, Cooperative Bank of Nueva Vizcaya, Cooperative Bank of Quezon Province, Cooperative Bank of Negros Oriental, and Cooperative Bank of La Union.

    Through the government’s Agricultural and Fisheries Financing Program (AFFP), funding would be coursed through the Cooperative Banks Agri-Lending Program II (CBAP II), one of AFFP’s lending facilities.

    Special time deposits will be sent directly to partner banks in the CBAP’s depository mode of credit delivery. According to the DA, the absence of intermediary facilities will result in lower interest rates that will benefit farmers and fisherfolk.

    The rural banking industry assures the communities that it remains true to its commitment to serve as their primary financial access point, particularly in times of calamity or disaster. Rural banks do so by promoting and adopting farming and rural development legislation that strengthens their ability to serve their rural communities, especially farmers and fisherfolk.

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