AS legislation to amend the law mandating loans for agriculture still hangs, the Bangko Sentral ng Pilipinas (BSP) has decided to make “interim” amendments to the current implementing rules and regulations (IRR) of the Agri-Agra credit law to boost lending to the sector.
In a press briefing on Thursday, BSP Governor Benjamin Diokno said the Central Bank, in coordination with the Department of Agriculture, has implemented four new provisions to the agri-agra law’s IRR.
First, they expanded the eligible modes of compliance with the 10-percent agrarian reform credit requirement to include loans to members of agrarian reform households, and financing of activities that benefit agrarian reform beneficiaries, their households and their communities.
Second, the BSP and DA removed the accreditation requirement for debt securities to be considered agri-agra eligible.
Third, investments in shares of stock of companies that are primarily engaged in eligible agricultural activities are now allowed as an eligible mode of alternative compliance.
The fourth new provision is to promote special lending arrangements that consider the holistic requirements of agricultural borrowers such as agricultural value chain financing.
“Fundamentally, the amendments broaden the access of the agrarian reform sector to bank financing, streamline banks’ process of investing in agri-agra eligible securities, and promote innovative financing solutions within the ambit of the law,” Diokno said.
“The amended IRR is a timely and positive development since it will enhance the agri-agra sector’s capacity to recover from the impact of the Covid-19 pandemic and other natural calamities through enhanced private-sector financing,” he added.
In end-2020, the local banking system’s total loans to the agricultural sector hit P642.4 billion. This translates to a 9-percent compliance ratio, falling short of the law’s requirement of 15 percent.
For the agrarian reform credit, the banking system lent out P71.2 billion during the year, representing a 1-percent compliance ratio. The law’s requirement is 10 percent.
Diokno said the amendments to the IRR are provisional and reiterated their support to the legislation of the amendments to the actual law.
“The amendments to the IRR of the Agri-Agra law [are] only an interim measure. For this year, the BSP, DA, DAR, Agricultural Credit Policy Council and other relevant agencies will continue to push for the enactment of comprehensive amendments to the Agri-Agra Law,” the BSP said.
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