Agri-agra loans rise 19% in Q1

MANILA, Philippines — Philippine banks continued to fall short of the mandated threshold for agriculture and agrarian reform lending despite the 18.9 percent increase in the first quarter, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The BSP reported the banking system was able to set aside a total of P711 billion of total loanable funds for agriculture and agrarian reform credit under Republic Act 10000 or the Agri-Agra Reform Credit Act of 2009 from January to March, higher than the P597.94 billion disbursed in the period last year.

The total loanable funds of the banking industry increased by 15.3 percent to P4.96 trillion as of end-March from P4.3 trillion in end-March last year.

Despite the increase, the combined allocation of loanable funds for agriculture and agrarian reform of 14.33 percent in the first quarter was way below the minimum threshold set by the law.

RA 10000 retained the mandatory credit allocation in Presidential Decree 717 where 25 percent of the 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 the banks to the agriculture sector amounted to P652.97 billion for 13.16 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 13.27 percent after extending P617.81 billion to the agriculture sector, while the ratio of thrift banks only reached 7.2 percent after granting P16.21 billion.

Rural banks extended P18.94 billion to the agriculture sector for a compliance ratio of 23.36 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 P58.03 billion for a compliance ratio of 1.17 percent.

The compliance ratio of big banks for agrarian reform loans only reached 1.01 percent, while that of thrift banks settled at one percent.

On the other hand, the compliance ratio of rural and cooperative banks reached 11.1 percent.

BSP Governor Benjamin Diokno had said the regulator is pushing for the amendments to the agri-agra law as it continues to punish banks through penalties for failing to meet the thresholds of the mandated lending.

“Amendments to this law will allow banks to merge their loan allocation to the farm sector as a measure to improve banks’ compliance rate,” Diokno said.