House to probe LandBank for losing P500M in bad loans to cooperatives
MANILA, Philippines—The House of Representatives will investigate the Land Bank of the Philippines (LandBank) to determine whether the state-owned bank was lax for losing around P500 million in loans to cooperatives and financial institutions in the provinces.
Cagayan de Oro Representative Rufus Rodriguez said on Monday that the committee on government enterprises and privatization would look into a report of the Commission on Audit (CoA) that LandBank wrote off P471.19 million in loans in 2010. Rodriguez said Landbank’s write-offs in 2010 were nine times more than its bad loans of P47.982 million in 2009. He said that close to 88 percent of the loans were traced to cooperatives while the balance was granted to rural banks and other lending agencies.
“These accounts were classified as uncollectible because of the financial difficulties of the borrowers or the borrowers could not be located,” said Rodriguez who filed House Resolution 2129 to look deeper into LandBank’s lending and credit-checking policies.
Rodriguez said Congress would look into the findings of CoA that LandBank’s bad loans surged after it relaxed its lending policy in 2009 when it dropped comprehensive surety agreements and deeds of assignment of receivables as part of the collateral requirements. Landbank also previously bound the key officers and management with the principal borrower to make them personally liable case of failure to pay the loans.
Rodriguez said LandBank should “strike a balance” in its lending as it should ensure its financial viability while fulfilling its social mandate of promoting countryside development while remaining financially viable.
“There is really a need to look into the matter and determine if there is a need to further enact new legislation to ensure that LandBank continues to perform its functions and help the countryside while at the same time ensuring its financial viability,” said Rodriguez.
Rodriguez said LandBank should heed the CoA’s recommendations that LandBank should review its policies and it should not give up in collecting these loans too quickly.
