BPI Direct BanKo, Inc. (BPI BanKo), the microfinance arm of listed Bank of the Philippine Islands (BPI), has launched an agricultural loan program to expand farmers’ access to financing.

BPI BanKo has partnered with agricultural financial technology company Agrilever and government agencies such as the Department of Agriculture and the National Irrigation Administration and local government units to launch the AgriNegosyoKo Loan Program.

“Going beyond financial aid, we’re committed to providing financial education programs and insurance coverage to safeguard the well-being of the farmers and the sustainability of our agricultural sector. Farmers now have the guidance and support they need to enhance the yield of their harvests and secure a prosperous future,” BPI Executive Vice Presodent, Mass Retail Segment Head and BPI BanKo Chairman Marie Josephine M. Ocampo said at an event on Wednesday.

Qualified farmers can get an uncollateralized loan ranging from P50,000 to P300,000 for a monthly rate of 2.3%, BPI BanKo President Rodolfo K. Mabiasen said. “That’s about P70,000-P80,000 per hectare.”

Repayment will be done at the end of the planting cycle after the produce has been sold, he said.

“We also don’t burden the farmer for the repayment because together with Agrilever, we can look for takers who will buy the produce,” Mr. Mabiasen said.

BPI BanKo is aiming to lend to 30,000 farmers within the first year of the program’s launch, around thrice the current number of farmers that BPI BanKo is currently servicing.

The loan will be available to farmers who are part of the program and have been endorsed by Agrilever.

Mr. Mabiasen said that while they expect defaults due to the risky nature of the segment, this is unlikely to affect asset quality materially.

BPI Chief Executive Officer Jose Teodoro K. Limcaoco added that Agrilever’s credit scoring and other technologies will also help in mitigating loan defaults.

“Working with Agrilever, we minimize the moral hazard because we provide the technology to the farmers to do the right thing. We provide the controls, so the funds are used properly,” Mr. Limcaoco said.

Bangko Sentral ng Pilipinas Deputy Governor Bernadette Romulo-Puyat said private sector lending to the agriculture sector has a vital role in the economy.

“Innovations like this are crucial for all sectors, including agriculture, as financial inclusion is a core advocacy of the BSP,” Ms. Romulo-Puyat said at the event.

BPI BanKo released P14.96 billion in business loans to over 200,000 borrowing clients in 2023 and ended the year with 350 branch-lite units. It operates in 77 provinces and has branches in 125 cities. — A.M.C. Sy