A CONGRESSMAN has filed a bill seeking to promote financial inclusion for rural communities and agricultural households through the participation of banking institutions, organization of farmer cooperatives and the creation of a special fund to finance these associations.

Representative Junie E. Cua of the first district of Quirino, who chairs the House Banks and Financial Intermediaries Committee, filed House Bill 5681 on Monday, which if passed will be known as The Rural Agricultural and Fisheries Financing Enhancement System Act.

The bill states that all banking institutions, whether government-owned or private, shall set aside a credit quota or a “minimum mandatory agricultural and fisheries financing requirement of at least twenty-five percent of their total loanable funds,” except newly established banks which have only commenced operations in five years or less.

Mr. Cua also highlighted the need to organize and train farmers into cooperatives with professional managers “who will access the credit financing from the banks,” adding that “these cooperatives/associations can provide ready, low-interest, and flexible financing” for the needs of the rural and agricultural households.

With the hope of improving the productivity of the farmers, House Bill 5681 also seeks to create an Agribusiness Management Capacity and Institution-Building Fund “to finance the organization, capacity and institution-building programs of rural cooperatives.”

Despite the enactment of the Republic Act 10000 or the Agri-Agra Reform Credit Act last 2009 which mandates lending by banks to farmers, financial institutions still found it difficult to invest in the agriculture industry and opted to pay the mandated penalties instead.

“The concept that banks are not merely credit providers but stakeholders in rural development is an underlying yet unrealized principle in the present law,” Mr. Cua said, emphasizing that “the proposed measure is effectively cementing the role of the financial sector as stakeholder and critical growth partner of the State in countryside development.” — G. L. Espedido

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