THE RURAL Bankers Association of the Philippines (RBAP) supports the central bank’s policy directive to boost guaranteed loans, but said the government should work on the backlog of claims for these schemes.
“Guaranteed lending definitely serves as an incentive for RBs (rural banks) to lend and expand their loan portfolios to cover sectors, which most rural banks would normally classify as risky and limit exposure to. This is a better option than mandated lending,” RBAP President Albert Concha said in an e-mail.
However, Mr. Concha said that guaranteed lending depends on the operational efficiency of the PhilGuarantee to properly process claims.
“Where claims for government backed loans are left pending, rural banks are left with no choice but to suspend lending to these sectors as well,” Mr. Concha said.
“So far, there have been backlogs on existing claims by rural banks though we have been assured that they are working on it,” he added.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said they will continue to work with the Philippine Guarantee Corp. (PhilGuarantee) for the expansion of credit guarantee programs for small businesses and the agriculture sector.
He said the BSP will include guaranteed mechanisms as part of their priority financial inclusion policies in the next six years.
Aside from guaranteed loans, Mr. Concha said mandated lending through the likes of the Agri-Agra Reform Credit Act of 2009 is also a good policy to boost financial inclusion.
A Bicameral Conference Committee is set to reconcile conflicting provisions of the amendments for the law approved by the House of Representatives and Senate. Among key provisions is the inclusion of the larger production chain process in agriculture as qualified lending.
The BSP hopes Congress, which is on a break for the upcoming elections, will prioritize changes to the Agri-Agra law in its remaining session days. — Luz Wendy T. Noble