Rural banks lead agri, MSME lending

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The rural banking industry continues to cater to the needs of the people in the countryside and the small businesses, with data from the Bangko Sentral ng Pilipinas (BSP) showing strong lending activity from the industry.

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First-quarter data by the BSP showed over-compliance by the rural and cooperative banks in extending agrarian reform and agricultural credit, achieving 34 and 17 percent, respectively, far beyond the required 15 and 10 percent.

The industry also generated a total of P55.2 billion in its total loanable fund at the end of the first quarter; total compliance for Agri-Agra credit grew to 28.3 percent in the first quarter this year from 19.9 percent in the same period in 2012.

It also added that rural banks extended more loans for the micro, small and medium enterprises (MSMEs).

Rural and cooperative banks posed a total P107 billion in the total loan portfolio for the sector. BSP data showed that they are in compliance with the 8 and 2 percent required allocated amount for micro and small enterprises and medium enterprises, respectively.

“As such, despite its minimal share in the banking system’s total loan portfolio, the rural and cooperative banking industry was able to cater to the needs of agri-agra, as well as MSME borrowers that may be underserved by larger banks,” the BSP said.

Also recently, 13 cooperative banks, 11 of which are RBAP members, were also tapped under 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 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 DA, the lack of intermediary facility will result in lower interest rates for the benefit of farmers and fisherfolk.

The Rural Bankers Association of the Philippines encourages its member banks to further strengthen their lending programs for the agriculture and small businesses sector to entice more borrowers and, ultimately, to contribute to local economies.

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