THE SENATE on Monday ratified the consolidated version of a bill amending Republic Act 10000 or the Agri-Agra Reform Credit Act of 2009, which recognized more activities for bank financing that allow institutions to meet the agricultural lending quota.

The bicameral report reconciles Senate Bill 2494 and House Bill 6134. The bill, certified as urgent by President Rodrigo R. Duterte, is known as “An Act Strengthening the Financing System, including Capacity-Building and Organization, for Agriculture, Fisheries, and Rural Development in the Philippines.”

“I am pleased to report on the successful outcome of the bicameral conference,” said Senator Cynthia A. Villar, who chairs the Senate Agriculture, Food and Agrarian Reform committee and was the primary sponsor of the bill, in plenary session.

“The conference committee decided to use the Senate version as the working draft of the discussion,” she added.

According to the report accompanying the consolidated bill, a new paragraph was added to the declaration of policy highlighting the importance of designing and implementing capacity-building programs to develop competencies of farmers, fisherfolk, and agrarian reform beneficiaries.

The objective of the capacity-building program is to get agricultural workers to operate productive, profitable and viable ventures while enhancing their ability to pay when they tap formal financing channels.

Under the proposed law, administrative sanctions and other penalties will be computed at one-half percent or at rates prescribed by the BSP Monetary Board. A revision was made to the penalty clause, where instead of 10%, 5% of penalties collected will be retained by the Bangko Sentral ng Pilipinas (BSP) to cover administrative expenses.

“Twenty percent shall be allocated as a fund for agricultural- and fishery-related organizational-, capacity-, and institution-building programs and activities to be implemented equally by the LBP (Land Bank of the Philippines) and DBP (Development Bank of the Philippines),” Ms. Villar said.

According to the bill, a portion of the Special Fund managed by the LBP and DBP will be used to fund capacity-building programs developing the knowledge, skills and income of agricultural stakeholders.

If signed into law, all banking institutions, except newly established banks, must set aside at least 25% of their total loanable funds for agricultural and fisheries-related sectors after they have been operating for five years.

Banks will be expected to design and offer financial products and services that suit the specific requirements of agricultural clients appropriate to their cash flows and production cycles. 

The bill also includes special lending arrangements for agribusiness enterprises with qualified agricultural borrowers and agricultural value chain financing, which cover production, distribution, manufacturing, and processing of agricultural products.

Banks can comply with the credit quota by lending to rural community beneficiaries to finance agricultural and fishery-related activities, as well as by investing in securities where the proceeds are meant to finance these activities. 

Other modes of compliance include opening deposit accounts with or investing in fixed-term deposit products of rural financial institutions (RFI), investing directly in RFIs, lending for the construction and upgrade of agriculture infrastructure, extending credit to agri-businesses that have commodity supply-chain arrangements with rural community beneficiaries, as well as engaging in sustainable finance.  

The BSP may also identify other activities that will qualify as part of the quota and is authorized to monitor and provide reports on the banks’ compliance with the measure.

The House has also ratified the bicameral report and the measure will be sent to the Palace for signing by President Rodrigo R. Duterte. — Alyssa Nicole O. Tan