The Department of Agriculture (DA) welcomes the signing of the amended implementing rules and regulations (IRR) of Republic Act No. 10000, or Agri-Agra Reform Credit Act of 2009, saying that the availability of agriculture and agrarian reform credit will provide the much-needed boost to increase the level of productivity and farmers’ incomes.
“After more than a decade since its enactment, and the fair share of controversies and problems in its implementation, we now have finalized and signed on January 20, 2021, the amendments of the IRR of the Agri-Agra Law, which would facilitate higher investments by banks in the agri-agra sectors,” said Agriculture Secretary William Dar.
“The signing of the amended IRR came at a very opportune time as our agri-fishery sector takes up the challenge of leading the economic recovery amid the protracted health crisis,” he added.
The amended IRR was jointly drafted by the Bangko Sentral ng Pilipinas (BSP), DA, and Department of Agrarian Reform (DAR), in consultation with the banking industry. It takes effect 15 days after publication.
The IRR amendments are the following:
- Deletion of the accreditation requirements for debt securities;
- Expansion in the modes of compliance with the agrarian reform credit;
- Expansion of agri-agra eligible purposes;
- Amendment to the computation of total loanable funds of newly-established banks; and
- Extension of loans to borrowers for purposes of financing activities identified under Section 23 of R.A. No. 8435, including palay housing and farming homestead.
The amendments will also reduce operational challenges faced by banks in complying with the provisions of R.A. 10000.
For his part, BSP Governor Benjamin Diokno, in previous statements, said that the Central Bank is eyeing wider implementation of the Agri-Agra Law, allowing banks to invest part of their mandated portfolio in “green projects” and other forms of resiliency projects and investments in rural communities.
Further, he said that banks find it hard to meet the total 25-percent threshold if they only lend to the agri-agra sector, thus, the BSP is now exploring ways to help financial institutions comply with the requirement of the law.
As of end-2019, banks have only extended P714.5 billion (B) worth of loans to the agriculture sector or about 52 percent of the P1.384 trillion (T) they should have lent out to beneficiaries, according to BSP data.
At the end of 2018, such loans totaled P707.4 B of the total of P1.240 T if all banks were fully compliant.
The banking system had set aside P662.62 B as funds for the sector from January to September 2020, still way below the mandated threshold during the period. ### (DA StratComms)
