LOANS provided by banks to the agriculture and agrarian reform sector grew by 15.26 percent in the first half of 2019, but fell short of the mandated threshold, Bangko Sentral ng Pilipinas (BSP) data showed over the weekend.
The banking system set aside P726.14 billion as funds for the sector in January-June, a P96.16-billion increase from P629.98 billion in the same period in 2018.
Total loanable funds rose by 14.92 percent to P5.29 trillion as of end-June from P4.60 trillion the previous year.
Despite the increase, the combined allocation for agriculture and agrarian reform — 13.72 percent of total loanable funds — was below the 25-percent threshold set by Republic Act 10000 or the “Agri-Agra Reform Credit Act of 2009.”
Under the law, banks are required to allocate 15 percent and 10 percent of their total loan portfolio to farmers and agrarian-reform beneficiaries, respectively.
Earlier, the BSP said agricultural financing reform is one of the legislative priorities of the monetary authority in the 17th Congress.
It includes changes in agri-agra law, such as allowing banks to merge their loan allocation to the farming sector as a measure to improve their compliance rate.
This came after BSP Governor Benjamin Diokno said the regulator is reviewing all its banking regulations to ease the burden on the “over-regulated” industry.
In particular, Diokno pointed out that monetary board members had unanimously concluded that the agri-agra rule mandating banks to set aside 25 percent of their total loan portfolio to the agriculture and agrarian reform sector needs to be reassessed.
“For example, I think the monetary board is unanimous that we have to do something about the agri-agra reform. Those are the things we are looking into,” he said.