MANILA, Philippines—Ortigas-based Producers Savings Bank Corp. has become the first thrift bank accredited by the Bangko Sentral ng Pilipinas to accept deposits and investments from universal and commercial banks that need to comply with mandatory lending to the agriculture and agrarian (Agri-Agra) sectors.
The BSP recently accredited Producers Bank as a participating rural financial institution for RA 10000, or the Agri-Agra Credit Reform Act of 2009.
Edmundo Medrano, Producers Bank president, said in an e-mail that with the BSP accreditation, the bank would now be “ready and open to explore possibilities with universal and commercial banks for mutually-beneficial arrangements as regards deposits and investments.”
“It is very difficult to get BSP accreditation (as RFI) as the portfolio of the bank concerned must be able to show that its average credit exposure to agri-agra must be greater than any exposure to other economic sectors in the past five quarters,” he said.
Under the new rules that took effect in December 2011, commercial banks are required to set aside at least 25 percent of their total loanable funds for agri-agra credit in general, of which at least 10 percent of the total loanable funds should be made available for agrarian reform beneficiaries.
Banks can either directly comply with the new rules by lending to qualified borrowers or by investing in special deposit accounts or preferred shares of BSP-accredited rural financial institutions.
The new rules no longer accept as alternative compliance to Agri-Agra investment in government securities, development loan incentive, lending to socialized low-cost housing, investment in local government bonds and Pag-IBIG bonds, and loans to microbusiness enterprises.
Its being the largest lender to palay farmers in the country helped Producers Bank pass the BSP’s screening for RFI accreditation.
Once its consolidation with the New Rural Bank of Victorias is approved by the Monetary Board, the bank also plans to start lending to sugar cane farmers.—Doris C. Dumlao