More rural banks accredited for agri-agra lending

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has added another rural bank to its list of accredited financial institutions that can receive funds from other lenders for compliance with the Agri-Agra Reform Credit Act of 2009.

According to Circular Letter 2014-017, BSP accredited the Rural Bank of Gattaran (Cagayan) Inc. last Feb. 12, bringing the number of accredited rural financial institutions to 10.

The other accredited firms are Rural Bank of Kiamba Inc., Producers Savings Bank, Rural Bank of Sta. Catalina Inc., Philippine Resources Savings Bank Corp., and the Rural Bank of Pilar (Bataan) Inc.

Banks can also lend to Common Wealth Rural Bank Inc., Rang-Ay Bank Inc., Agri Business Rural Bank Inc., and the Rural Bank of Bay Inc. as part of their compliance with the Agri-Agra Law.

The Rural Bank of Barili (Cebu), Inc., which appeared in the list of accredited rural financial institutions published through BSP Circular Letter 2013-040 in July last year, was not included in the latest central bank issuance.

Republic Act (RA) 10000 or the Agri-Agra Reform Credit Act requires banks to allocate at least 25 percent of their total loanable funds for credit extended to the agriculture and agrarian reform sectors.

Specifically, 15 percent should go to agriculture and fisheries credit, while the remaining 10 percent for agrarian reform beneficiaries.

Banks may lend to the sectors themselves or to accredited rural financial institutions, which will re-lend these funds to the target markets.

The 2011 revised implementing rules and regulations of the law state that banks’ compliance may be through the purchase of eligible loans, or by subscribing to shares of stocks and investing in the special deposit accounts of accredited rural financial institutions.

The Agri-Agra Law was meant to provide more credit sources for farmers, fisherfolk, agrarian reform beneficiaries, farmworkers, fishworkers, farmers’ and fisherfolks’ cooperatives and organization, and other workers of the agriculture and agrarian reform sectors.

The central bank stressed that its accreditation only certifies that the loan portfolio of those included in the list complies with the requirements under the Agri-Agra Law.

“The accreditation does not serve as an endorsement by the BSP of the safety and soundness of the above listed banks. The accreditation cannot be used for any purpose other than for implementing the provisions of the Agri-Agra Reform Credit Act of 2009 and its related rules and regulations,” the circular read.

Banks are required to submit a quarterly report on their compliance with the Agri-Agra Law. Lenders face monetary penalties for non-compliance, delayed reports, or false reports.

Banks may also be slapped with non-monetary fines on willful delay or refusal to submit reports, or for deliberate submission of false or misleading statements and reports.