DUE to their failure to provide loans for farmers, a congressman from Bicol said local banks nationwide were also to blame for the poor performance of the agriculture sector.
In a statement, Representative of the Second District of Camarines Sur Luis Raymond F. Villafuerte Jr. said he hoped that with the signing into law of the Personal Property Security Act, banks would open their credit facilities to farmers and other small rural entrepreneurs.
Under the newly signed law, equipment, such as vehicles and machinery, as well as inventory of agricultural products are now acceptable as collateral for loans.
“It is unconscionable for our banking sector to continue raking in profits hand over fist while not helping reverse slow farm productivity, which impedes GDP growth and thereby prevents the government from fully realizing President Duterte’s goal of supercharging regional growth and countryside development on his watch,” Villafuerte said.
Villafuerte said data from the Bangko Sentral ng Pilipinas (BSP) showed big banks failed to comply with the required level of lending to the agriculture sector in June.
Republic Act (RA) 10000, or the Agri-Agra Reform Credit Act, mandates banks to allot at least 10 percent of their respective total loanable funds to agrarian-reform beneficiaries and 15 percent to farmers and fishermen.
According to the BSP, universal, commercial and thrift banks only extended P629.98 billion in loans to the agriculture sector as of end-June, or just 54.7 percent of the P1.151 trillion they should have lent out to beneficiaries during that period.
Big banks posted the lowest compliance rate, having set aside 0.78 percent of loanable funds or P33.361 billion, which is only a small fraction of the P427.094 billion they should have lent to the farm sector. Thrift banks are only extending borrowings of P3.33 billion for agrarian reform, well below the P25.962-billion standard.
Only rural and cooperative banks were compliant, surpassing the floor rate and allotting over 11 percent of their available funds. This amounted to P8.361 billion, well above the P7.477-billion minimum prescribed under the law.
Rather than lending to the farm sector, Villafuerte said banks preferred to pay penalties for their noncompliance to the Agri-Agra law.
Socioeconomic Planning Secretary Ernesto M. Pernia earlier said the country needs “to boost financial services to help our small and medium enterprises.”
“More important, such services will establish an inclusive financial sector,” he added.
Pernia was also quoted in a statement as saying that among other government initiatives, RA 11057, or the Personal Property Security Act, strengthens the legal framework for the use of personal property as collateral, and establishes a modern, centralized online collateral registry.
RA 11057 was signed into law on August 17. He said this will make financing more accessible to Filipino SMEs, including export-oriented firms.
Further, Pernia said the government is increasing credit guarantees from P10 billion to P50 billion for SME exporters through the Philippine Export-Import Credit Agency (PhilExim), an attached agency of the Department of Finance.
The PhilExim provides guarantees to facilitate foreign loans of export-oriented industries, public utilities and those registered with the Board of Investments.