BSP vows proper implementation of Agri-Ara, Rural Financing Law

The Bangko Sentral Ng Pilipinas (BSP) vowed to effectively implement the recently passed new Agri-Agra and Rural Financing Law.

The Republic Act (RA) of Republic Act (RA) No. 11901 or “The Agriculture, Fisheries, and Rural Development Financing Enhancement Act of 2022” that provides a comprehensive financing framework for the development of the agriculture and fisheries sector and rural communities.

“The BSP is committed to the effective implementation of this law, which aims to enhance access of rural communities and agricultural and fisheries households, including their micro, small, and medium enterprises (MSMEs), to much needed financial services and programs,” said BSP Governor Felipe M. Medalla in a statement.

According to Medalla, the new Agri-Agra and Rural Financing law has been a priority legislative measure of the BSP “since it considers the requirements of rural community beneficiaries from a holistic perspective, taking into account their evolving social networks and complex needs.”

The new law broadens activities for agricultural credit and rural development financing to include agri-tourism, digitalization of agricultural activities and processes, public rural infrastructure, programs that promote health and wellness of rural communities, and activities that improve livelihood skills. It also promotes financing toward environmental, social, and governance projects, including green projects that support sustainable and inclusive economic growth.

Banks are no longer required to reserve 10 percent of their lending portfolio for agrarian reform beneficiaries and 15 percent for agricultural activities. Instead, this new law provides banks with greater flexibility in allocating the combined 25 percent mandatory credit quota to a range of borrowers in the agriculture, fisheries, and agrarian reform sectors.

Moreover, banks that are unable to directly lend to rural community beneficiaries may contribute through other means, such as investing in debt and equity securities, undertaking agricultural value chain financing, and granting agri-business loans to fund agricultural and community enhancing activities.

In addition, the law provides a mechanism to finance organizational, capacity, and institution-building programs to improve competitiveness and productivity in agriculture and fisheries, as well as rural communities.

“The enactment of the new Agri-Agra and Rural Financing law is a timely and positive development since it will assist the sector’s recovery from the impact of the COVID-19 pandemic and other natural calamities through private sector financing,” the Governor emphasized.