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Banks miss lending quota for agriculture, agrarian sectors


LENDERS were not able to meet the required credit for the agriculture and agrarian (agri-agra) reform sectors in the July-to-September period, based on central bank data.

Banks disbursed loans worth P804.17 billion in the third quarter for the two sectors, according to preliminary data released by the Bangko Sentral ng Pilipinas (BSP).

In the same period, total loanable funds stood at P7.493 trillion.

With the 10% agrarian reform and 15% agriculture credit required under Republic Act 10000 or the Agri-Agra Reform Credit Act of 2009, the minimum credit allocation was at P1.124 trillion.

Broken down, credit allocation for the agrarian reform sector amounted to P68.932 billion, which is only 0.92% of banks’ total loanable funds. This is well below the 10% quota.

Credit to the sector disbursed by big, thrift, and rural banks stood at P55.042 billion, P3.053 billion, and P10.837 billion, respectively. All have failed to meet the minimum required lending.

Meanwhile, compliance for the agriculture sector amounted to P735.241 billion or 9.81% of banks’ total loanable funds. This is short of the 15% minimum requirement.

Big, thrift, and rural banks did not meet the quota with financing to the sector during the period amounting to P700.148 billion, P16.944 billion, and P18.149 billion, respectively.

The central bank earlier said lenders pay about P2 billion on average in penalties every year since 2011 due to their noncompliance with the Agri-Agra law.

BSP officials have been pushing for amending the measure to include loans in the agricultural value chain as part of compliance with the quotas. This would include distribution, manufacturing, processing, and manufacturing, which are part of the agribusiness production chain.

In March, BSP issued Circular 1111 which allowed credit for activities that cover converting an agricultural product from raw material to its consumption form as part of the agri-agra compliance. It is seen as an interim measure while the law has yet to be amended.

House Bill 1634, which provides for the expansion of eligible agri-agra loans, was passed on third reading in March 2020 and was transmitted to the Senate. Its counterpart bill remains pending at the committee level. — Luz Wendy T. Noble

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