MANILA, Philippines — Loans extended by Philippine banks to the agriculture and agrarian reform sector grew by 19.3 percent to P851.76 billion last year from the previous year’s P713.6 billion, preliminary data released by the Bangko Sentral ng Pilipinas (BSP) showed.
Despite the increase, the BSP said lending for agriculture and agrarian reform remains way below the 25 percent mandated under Republic Act 10000 or the Agri-Agra Reform Credit Act of 2009.
The BSP said Philippine banks were only able to allocate about 10.48 percent of their P7.99 trillion loanable funds generated last year, below the mandated 25 percent equivalent to P2 trillion.
The law retained the mandatory credit allocation in Presidential Decree 717, which requires 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.
Lending to the agriculture sector went up by 20.9 percent to P776.44 billion from P642.37 billion for a 9.71 percent compliance ratio, below the required 15 percent.
The BSP said big banks or universal and commercial banks registered a compliance ratio of 9.83 percent after extending P740.28 billion to the agriculture sector, while the ratio of thrift or mid-sized banks only reached 5.47 percent after granting P18.14 billion.
Rural banks extended P18.01 billion to the agriculture sector for a compliance ratio of 14.15 percent.
Likewise, bank loans for agrarian reform rose by 5.7 percent to P75.32 billion in 2021 from P71.23 billion in 2020. The amount, however, still fell short of the mandated 10 percent with a compliance ratio of a measly 0.94 percent.
The compliance ratio of big banks for agrarian reform loans only reached 0.82 percent, while that of thrift banks settled at 0.96 percent, as well as rural and cooperative banks with 8.28 percent.
The amendment to the Agri-Agra Law is one of the seven key legislations being pushed by the BSP in the 18th Congress.
BSP Governor Benjamin Diokno earlier said there is still time for the current Congress to pass legislation amending a law that prescribes lending quotas for banks in financing farmers and agrarian reform beneficiaries.
“We recognize the limited time left for the 18th Congress. Among the bills supported by the BSP, we believe that the Agri-Agra bill may be prioritized by Congress considering that it is in the advanced stage of the legislative process,” Diokno said.
The proposed changes in both the Senate and the House of Representatives have hurdled third and final reading. A bicameral conference is set to harmonize the two chambers’ measures.
