Landbank opens loan window for rural banks

MANILA, Philippines — Rural banks hoping to expand their electronic channels may acquire a loan from state-run Land Bank of the Philippines through a P1-billion credit facility specifically for digitalization.

Landbank yesterday announced that it opened a lending program with a P1 billion funding that countryside financial institutions (CFIs) may tap into for their digital transition.

Dubbed the Digitalization of CFIs (DIGI-CFI), the program seeks to finance digitalization efforts embarked on by banks serving in remote areas.

Landbank president and CEO Cecilia Borromeo said rural banks may secure a loan through the credit line to pay for the licensing or subscription fee of a commercial software. Further, they may access DIGI-CFI to cover the outsourcing of information technology systems.

Borromeo also said the program may bankroll the acquisition of hardware and the purchase of software for the upgrade of a CFI’s digital platform. Rural banks may ask for financing support in maintaining the applications and systems that they would install.

Under DIGI-CFI, rural, including cooperative and thrift, banks can borrow up to 80 percent of the project cost of their digitalization program.

Term loans will be imposed an interest rate of five percent per annum, fixed for the first year and subject for repricing thereafter, and should be settled by the borrower within five years.

For short-dated loans, the interest rate will be based on Landbank’s applicable benchmark and borrowers are given up to one year to pay the principal plus interest.

“Landbank aims to boost the capacity of rural banks to contribute to the digitalization wave. The possibilities for growth are endless, with the goal of promoting financial inclusion and providing innovative and responsive digital financial services,” Borromeo said.

Landbank has given out P9.66 billion in loans to at least 88 CFIs as of April, funding various efforts to advance financial inclusion and push for countryside development.