Agri-agra loans grow double-digit in H1

MANILA, Philippines – Loans extended by Philippine banks for agriculture and agrarian reform booked a double-digit growth in the first half of the year but still fell short of the threshold mandated under the law, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The BSP reported the banking system was able to set aside a total of P423.94 billion of loanable funds for agriculture and agrarian reform credit under RA 10000 or the Agri-Agra Reform Credit Act of 2009 from January to June, 13.9 percent higher than the P372.21 billion in the same period last year.

The total loanable funds generated by the banking industry jumped 36.4 percent to P2.99 trillion as of end-June from P2.18 trillion in end-June last year.

Despite the increase, the combined allocation of loanable funds from agriculture and agrarian reform of 14.15 percent in the first half of the year was way below the minimum threshold set by the law.

RA 10000 retained the mandatory credit allocation in PD 717 where 25 percent of banks’ total loanable funds are to be set aside for agriculture and fisheries in general, of which at least 10 percent should be made available for agrarian reform beneficiaries.

The BSP reported the loans extended by banks to the agriculture sector amounted to P394.82 billion, equivalent to a 13.2 percent compliance ratio or below the required 15 percent.

The central bank said big banks or universal and commercial banks registered a compliance ratio of 13.09 percent after extending P361.89 billion to the agriculture sector, while the ratio of thrift banks only reached 9.92 percent after granting P18.25 billion.

Rural banks extended P14.99 billion to the agriculture sector for a compliance ratio of 33.05 percent.

Likewise, the compliance ratio of the banking system fell way short of the 10 percent threshold for agrarian reform credit as banks only extended loans amounting to P29.12 billion for a compliance ratio of 0.97 percent.