Agri-agra lending still below threshold in H1

MANILA, Philippines — Banks extended 13.6 percent more loans for agriculture and agrarian reform in the first semester, but continued to fall short of the mandated threshold for the sector, data released by the Bangko Sentral ng Pilipinas (BSP) showed.

Preliminary data from the BSP showed banks increased their lending for agri-agra to P789.66 billion from P695.06 billion in the same period last year.

The amount, however, comprised only 10.63 percent of the banking industry’s total loanable funds from January to June this year, less than half of the 25 percent mandate under Republic Act 10000 or the Agri-Agra Reform Credit Act of 2009.

Total loanable fund by the banking industry increased 16.7 percent to P7.42 trillion in end-June this year from P6.36 trillion last year.

The law retained the mandatory credit allocation in Presidential Decree 717 where 15 percent of banks’ total loanable funds are to be set aside for agriculture, while 10 percent should be made available for agrarian reform beneficiaries.

According to the BSP, loans extended by the banks to the agriculture sector grew by about 13 percent to P718.07 billion from P635.59 billion for a 9.67 percent compliance ratio, still below the required 15 percent.

The central bank said big banks, or universal and commercial banks, registered a compliance ratio of 9.8 percent after extending P682.68 billion to the agriculture sector while the ratio of thrift or mid-sized banks only reached 5.21 percent after granting P17.07 billion.

Rural banks extended P17.82 billion to the agriculture sector for a compliance ratio of 14.91 percent.

Likewise, loans for agrarian reform extended by banks jumped by 20.4 percent to P71.58 billion in end-June from last year’s P59.47 billion. However, the amount still fell short of the mandated 10 percent with a compliance ratio of only 0.96 percent.

The compliance ratio of big banks for agrarian reform loans only reached 0.83 percent; that of thrift banks settled at 0.97 percent; while rural and cooperative banks pegged at 8.93 percent.

BSP managing director Lyn Javier earlier told the Senate the agency had collected P13.4 billion worth of fines from banks that failed to comply with the mandate from 2011 to 2018.

The BSP is pushing further amendments to the mandated loan threshold for agri-agra activities to push the country into the next stage of development post COVID-19.

The regulator together with the Department of Agriculture and the Department of Agrarian Reform have approved the amendments to the implementing rules and regulations of the Agri-Agra Law last March as an interim measure pending the passage of the proposed amendments.