outbrain
Close  

Banks urged to lend more to farmers, fisherfolk

/ 05:13 AM June 04, 2018

It’s impossible for Congress to repeal the agri-agra law that mandates banks to set aside 25 percent of their loan portfolio to farmers, agrarian reform beneficiaries and fisherfolk, but the law can be enhanced to be more relevant.

This was according to Sen. Cynthia Villar, chair of the Senate committee on agriculture and food, who told the Chamber of Thrift Banks on Friday to brainstorm and find “creative” ways to make the agri-agra law more responsive to both the farming and banking communities.

ADVERTISEMENT

Villar said it was still good for the Philippines to keep the agri-agra law given that there were 12 million people involved in the farming sector—whether cultivating crops, raising livestock or poultry, dairy or are into fisheries. With an average family of five, she noted that 60 million people or majority of the population depended on this sector.

“No matter how hard, if we’re not going to help them, then we are not helping the majority of the Philippines,” Villar said. “What we can do in the agri-agra law is we keep on thinking of ways to improve it. We should be creative so we can fulfill the 25 percent (mandatory lending), then be able to help really the poorest in the country,” Villar said.

FEATURED STORIES

Villar appealed to banks to consider the plight of local farmers who were earning an average of only P4,500 monthly against the P6,300 estimated monthly cost to provide decent food for a family of five.

If the nation were to reduce the poverty incidence, currently at 22 percent, Villar said banks would have to fulfill their mandate to lend to farmers.

“What we should do is to explore possibilities to improve on agri-agra law so it can help agriculture, at the same time, make it reasonable for the banking community,” she said.

“We have to really think very hard about it. Maybe the problem is collateral. We can’t find collateral that will be suitable to the banking system,” she said.

Another problem is lack of education, she said, adding that some farmers might have suitable collateral but might not know how to borrow from banks.

One proposal cited was to just bring down the mandated requirement for the agrarian sector and increase the requirement for agriculture.

Of the 25 percent mandatory lending, banks are required to allocate at least 10 percent of total loanable funds to agrarian reform beneficiaries and 15 percent for farmers and fisherfolk.

ADVERTISEMENT

Villar said this could be done “if we can’t think of any other creative amendment.”

Compliance with the agri-agri law has been perennially low for the banking system in general. Many complain of difficulty in finding creditworthy borrowers.

“We have one year. This Congress will end next year. We want you to talk about it. I want you to be creative,” she said.

Subscribe to Inquirer Business Newsletter
Read Next
EDITORS' PICK
MOST READ
Don't miss out on the latest news and information.
View comments

Subscribe to INQUIRER PLUS to get access to The Philippine Daily Inquirer & other 70+ titles, share up to 5 gadgets, listen to the news, download as early as 4am & share articles on social media. Call 896 6000.

TAGS: banks, Business, farmers, fisherfolk
For feedback, complaints, or inquiries, contact us.


© Copyright 1997-2020 INQUIRER.net | All Rights Reserved

We use cookies to ensure you get the best experience on our website. By continuing, you are agreeing to our use of cookies. To find out more, please click this link.