Big lenders fail to meet agri-agra credit quota
ONLY rural and cooperative banks fulfilled the mandatory credit quota for the agriculture sector in 2016, central bank data bared, with bigger lenders unable to meet the levels required under a law that seeks to boost farm output.
Universal, commercial, and thrift banks again failed to hit the required lending to the agricultural and agrarian reform sector last year, according to data from the Bangko Sentral ng Pilipinas (BSP).
Signed in 2010, Republic Act 10000 or the Agri-Agra Reform Credit Act imposes a credit quota for the farming sector, wherein banks must allocate at least 10% of total loanable funds to agrarian reform beneficiaries, and 15% for farmers and fisherfolk.
Direct compliance involves loan approvals to qualified borrowers and the purchase of eligible loans from other financial firms. Meanwhile, alternative methods include investing in duly declared eligible debt instruments, investing in the special deposit accounts of BSP-accredited rural lenders, wholesale lending to rural banks, granting rediscount loans to other banks covering farm loan credits, and the extension of loans for public infrastructure for the benefit of the farming sector.
Only rural and cooperative lenders hit the credit thresholds in 2016, having granted 28.79% of its loanable funds to farmers worth P14.582 billion. It also extended P8.327 billion in loans for agrarian reform, well above the P5.064-billion requirement.
On the other hand, big banks failed to reach the required lending as it granted P24.554 billion for agrarian reform, versus the P331.506- billion minimum amount. This stood at just 0.74% of the P3.315- trillion loanable funds held by the banks, and is well below the 10% minimum.
Universal and commercial lenders also missed the 15% allocation for farmers, having ex-
tended only P422.559 billion against the P497.259-billion requirement.
As for thrift banks, loans to farmers stood at P15.047 billion against a minimum of P24.505 billion. Lending to agrarian reform beneficiaries totalled P3.131 billion, or just 1.92% of the banks’ total loanable funds.
Across the entire banking system, total lending to the sector fell way below the P882.268 billion cumulatively required under the law, having approved just P488.201 billion in credit lines to the farming sector. This accounted for roughly 13.8% of the P3.529 trillion which the banks can lend during the period.
Broken down, Philippine banks set aside 12.81% of their loan portfolio for farmers and fisherfolk, and 1.02% for borrowers under the agrarian reform program.