The Bangko Sentral ng Pilipinas (BSP) has expanded its list of institutions that can accept wholesale credit from other banks looking for alternative ways to comply with the lending requirements to the agriculture sector.
In a circular letter published Friday, the BSP said 10 banks are now considered as accredited rural financial institutions (ARFI).
Banks on the original list of ARFIs were the Rural Bank of Kiamba, the Rural Bank of Barili, Producers Savings Bank, Rural Bank of Sta. Catalina, Community Rural Bank of Catmon, and the Rural Bank of Bay.
Four new banks were added to the list: the Rural Bank of Pilar, Commonwealth Rural Bank, Rang-Ay Bank, Agri Business Rural Bank and Philippine Resources Savings Bank.
Under Republic Act No. 10000 or the Agri-Agra Reform Credit Act, local banks are required to allot 15 percent of their portfolios for agriculture, and 10 percent to agrarian reform beneficiaries.
The agriculture sector employs 30.4 percent of the country’s workforce, latest data from the National Statistics Office showed.
However, it is one of the slowest growing parts of the economy. The agriculture, forestry, and fisheries industries collectively grew by just 3.3 percent in the first quarter of the year, much slower than the total gross domestic product growth of 7.8 percent.
The 2011 law was passed to “promote rural development by enhancing access of the rural agricultural sector to financial services and programs that increase market efficiency and promote modernization in the rural agricultural sector.”
“ARFIs act as direct conduits to the agriculture sector and agrarian reform beneficiaries by channeling the funds specifically allotted by other banks for the program. This gives RFIs a critical role in the funding chain,” the BSP said in a statement.