Banks offer P200 billion for agriculture projects

MANILA, Philippines — Some of the country’s private banks have offered to finance up to P200 billion worth of government projects in the farm sector, Agriculture Secretary Emmanuel Piñol said.

Piñol recently met with officials from the private sector including the Chamber of Thrift Banks, Metropolitan Bank and Trust Co., Bank of the Philippine Islands, EastWest Bank, Sterling Bank of Asia and Development Bank of the Philippines, as well as the Zest-O Group.

“The bankers said they fully support the idea earlier submitted by the DA for the floating of bonds to finance the banner programs of the agriculture sector,” Piñol said.

“They are also open to funding projects which would be certified by the government as Agri-Agra Law compliant,” he added.

Currently, the law requires banks to allot 15 percent of their loan portfolio for agriculture and the remaining 10 percent for agrarian reform beneficiaries. However, the banking industry has been non-compliant with the law for many years now.

Since the  enactment of the law, the utilization of the loan funds has been very low and banks will rather pay the penalties.

“They said they have about P200 billion which they could use to fund agriculture and agrarian projects to comply with the Agri-Agra Law,” Piñol said.

Among the projects that the banks are interested in are the solar-powered irrigation program, farm mechanization and the completion of the farm-to-market road network.

The Agricultural Credit Policy Council will submit to the bankers’ group a list of Agri-Agra Law compliant projects which can be considered for funding.

Data from the Bangko Sentral ng Pilipinas showed that non-compliance of the total banking system to the law amounted to P460 billion as most banks prefer to just pay the penalty of about P5 billion instead of lending to farmers who are considered as high-risks.