LandBank looks for ways to fund loan program for farmers
While private banks still fail to comply a AgriAgra Law — which requires all banks to set aside 25 percent of their loan portfolio to the farming sector — Land Bank of the Philippines (LandBank) figured that it has to go on either with its own funds or other scheme to support Filipino farmers.
Right now, LandBank is setting aside as much as 110 billion from its own funds to bankroll several lending program for farmers, which make up one of the poorest sectors in the Philippines.
This, while latest data from the Bangko Sentral ng Pilipinas (BSP) show that non-compliance of the total banking system to Agri-Agra law already amounted to P459.84 billion as of end-2017.
"LandBank can source additional funding by issuing Small Farmers Corporative Bonds, against loans extended to Agri Corporative Corporations, which will be auctioned to other banks as alternative compliance to Agri-Agra Law," the bank said in a statement.
LandBank President and CEO Alex Buenaventura explained that with the issuance of LandBank Small Farmers Corporative Bonds, the government will not only raise funds for lending to farmers but it will also provide an added instrument for banks to comply with the requirement of the Agri-Agra Law, especially on the 10 percent of loan portfolio requirement for agrarian reform farmers.
Over the weekend, the bank announced that it recently partnered with the Department of Agrarian Reform (DAR) and the Department of Agriculture (DA) to develop a new loan program to increase the income of small farmers especially the Agrarian Reform Beneficiaries (ARBs).
DAR Secretary John Castriciones led the launching of the new lending facility, which is called Accessible and Sustainable Lending Program for Small Farmers or ASL Farmers Program.
The ASL Farmers Program is in compliance with Presidential Directive No. 2018-0176 which directs LandBank, in coordination with DA and DAR, to reach out to farmers and provide them with financial assistance for their agricultural needs.
“We have high hopes for this program which will make credit very accessible to most Filipino farmers at a low interest rate of 6 percent per annum. This complements LandBank’s existing agricultural lending programs, as we strive harder to help small farmers increase their productivity and income,” said Buenaventura.
The program has three lending modules namely: Module 1 – Lending to Individual Small Farmers and through Agri-based Cooperatives/Associations; Module 2 – Lending through LandBankAssisted Agri-based Cooperatives/Associations; and Module 3 – Lending Farmers Cooperatives through Farmers Corporative Inclusive Financing Program.
As part of the program, small farmers and ARBs can avail of a “Crop Production Loan” of up to 90 percent of the project cost, with interest rate fixed at 6 percent per annum.
Another credit program for individual farmers is the Freedom from Debt Loan, a one-time loan take-out which can cover the debt of farmers from various credit conduits. (MBM)