New lending program for countryside financial institutions

THE Countryside Financial Institutions Enhancement Program (CFIEP), a joint program of Bangko Sentral ng Pilipinas (BSP), Philippine Deposit Insurance Corp. and Land Bank of the Philippines (LandBank), is rolling out a new lending program to assist Countryside Financial Institutions (CFIs) that have been affected by natural calamities, manmade disasters, pests and diseases and viral infections or outbreaks, including the Covid-19 pandemic.

The CFIEP 2020 Calamity Assistance Program (CFIEP-2020 Cap) lending program will provide additional working capital to cooperative banks, rural banks and thrift banks. The credit assistance may augment liquidity of

CFIs that are affected by extensions or defaults of its borrowers as a result of calamities/disasters/ viral infections, and thereby encourage CFIs to continue lending, particularly to the agricultural sector.

“In the first three months of the year alone, our country has been hit by various calamities that have caused unfavorable outcomes to CFIs. We hope that the CFIEP 2020 Cap will help them recover from the damages and disruptions in their operations, and enable them to restore operational cash flows, thus, allowing them to continue lending to small farmers,” LandBank president and chief executive officer Cecilia Borromeo said.

The program will be made available by LandBank to eligible CFIs at an amount equivalent to 90 percent of their affected existing portfolio or P10 million per CFI, whichever is lower, provided that the loan amount does not exceed the CFI’s borrowing capacity, as per the bank’s existing policy. The loan shall bear an affordable interest rate of 4.5 percent per annum, fixed for one year and subject to annual repricing thereafter. The loan shall be payable up to a maximum of five years, with up to one-year grace period on principal and interest payments.

The CFIs are also expected to relend the fund to their affected end-borrowers at concessional interest rates.

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