January 11, 2021 | 12:04 am
A measure that will establish a system for financing agriculture, fisheries and rural development has been filed in the Senate, signalling progress for a proposed law already passed in the House.
Senate Bill No. 1924, the proposed “Rural Agricultural and Fisheries Financing Enhancement System” act, seeks to institutionalize the financing of farm modernization and programs to raise productivity.
If passed, the measure will require financial institutions to set aside at least 25% of their total loanable funds, while expanding banking activities that qualify as agricultural and fisheries financing.
These include mechanization, agri-tourism, green finance projects, land acquisition, marketing, processing, distribution and storage, and public rural infrastructure.
The Agri-Agra Reform Credit Act of 2009, or Republic Act No. 10000, also sets a quota for banks to lend to the agriculture sector, which has led to undercompliance with financial institutions typically preferring to absorb the penalties for failing to meet the minimum lending levels.
The bill will allow banks to comply with the credit quota by investing in debt securities and opening deposit accounts with and investing directly in shares of rural financial institutions.
It also considers as eligible loans those supporting the construction and upgrading of infrastructure such as farm-to-market roads in rural areas.
The bill seeks to create the Agribusiness Management Capacity and Institution-building fund and program, which will be allocated P10 billion. Funding will come from penalties collected for the non-compliance and under compliance with the credit quota set by the Agri-Agra law.
The fund, which will be managed by Agricultural and Fisheries Finance and Capacity Building Council, will also support capacity-building by rural agricultural and fisheries organizations.
Chief Economist Michael L. Ricafort of the Rizal Commercial Banking Corp. said the measure will complement current lending requirements and support initiatives to provide financing, investment, and infrastructure related to the agriculture sector.
“For the countryside, (the bill will help) ensure sustainable and more inclusive economic development and growth over the long term, as part of the effort to alleviate poverty incidence as well,” he said in an e-mail Sunday.
The measure is among the bills being pushed by the Bangko Sentral ng Pilipinas. Its counterpart, House Bill No. 6134, has secured final approval in the chamber. — Charmaine A. Tadalan