DAVAO CITY — Rizal Commercial Banking Corp. (RCBC) is looking at providing more loans to the agricultural sector as one of its main strategies in growing its portfolio in Mindanao, its top executive said.
RCBC President Eugene S. Acevedo, in a press conference here on Monday, said Mindanao is ready to absorb a growth in the banking industry as the peace and order situation has largely become stable.
In the past, banks did not have a “deliberate strategy to invest and in lending in Mindanao… But I think that has changed,” said Mr. Acevedo, who was born in Bislig City in the eastern part of Mindanao.
He said RCBC and other banks want to participate in developing the southern island’s agricultural value chain through compliance with the Agri-Agra Reform Credit Act, but adjustments on the law’s implementation must also be initiated by the Bangko Sentral ng Pilipinas (BSP).
The Bankers Association of the Philippines, where Mr. Acevedo serves as one of the members of the board of directors, has been discussing possible amendments such expanding the loan program to any agriculture-related project, including infrastructure such a farm-to-market roads, he said.
The Agri-Agra Reform Credit Act or Republic Act 10000 mandates banks to allocate at least 10% of their total loanable funds to agrarian reform beneficiaries and 15% to farmers and fisherfolk.
Mr. Acevedo added that financial institutions, for their part, must “put in place a disaster contingency mechanism requiring the adoption of risk mitigants to minimize losses and provide relief to a borrower to facilitate recovery.”
RCBC is expanding its presence in Mindanao through increased human resources while maintaining its 58 branches around the island out of the 507 nationwide, he said.
It has also established a separate Mindanao lending division, which was previously lumped under the Visayas-Mindanao division.
“Fifty eight branches in Mindanao is a lot and 17 branches in Davao is a lot of branches. The idea now is to make those branches more productive,” Mr. Acevedo said.
The bank’s current loan portfolio in Mindanao is “small” at around P6 billion, out of the total P398 billion in 2018.
Mr. Acevedo said these are mainly consumer,and small and medium enterprise (SME) loans under Rizal Microbank.
“Its growing fast but it is small… It is 27% growth and I want to see it growing faster.”
Mr. Acevedo also said the adoption of digital technology, particularly data analytics, would be crucial to their overall expansion plans, including in Mindanao.
“The existing SME process is extremely manual. The credit process that accompanies that uses antiquated credit procedures. As a result, the ability of banks to respond on to SMEs is extremely slow. The answer is, which steps of the process can be handed over to our robotic process automation, how much of the process can be done through credit scoring using data analytics and finally how much of the process can we fix so that the process design makes it delightful for the customer.” — Carmelito Q. Francisco and Maya M. Padillo