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Rural banks increase health and agriculture lending

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rice farmer
PHILSTAR

LOAN DISBURSEMENTS by rural banks to essential sectors such as health and agriculture rose during the pandemic, the industry association said.

“We have seen an uptick in credit applications and disbursements from the agricultural and health sectors,” Rural Bankers Association Association of the Philippines President Elizabeth C. Timbol said in an e-mail.

Ms. Timbol noted that agriculture loan applicants were mainly involved in hog raising, poultry, and other aspects of food production.

Applications from the health sector came from entrepreneurs selling products deemed essential to comply with health measures protocol and hospital equipment are also among those that applied for credit during the crisis, she added.

Ms. Timbol said the Philippine Guarantee Corp. (Philguarantee) as well as the Department of Industry and the Small Business Corp. “should expedite” their applications to enable rural lenders to lend to more micro-, small, and medium-sized (MSMEs) and help them recover from the crisis.

“Other government relief measures were not extended to rural banks and others have stricter requirements and slow processing in terms of applications,” she said.

“The government should prioritize the rural banks by making them conduits for all the relief measures to affected sectors in the society,” Ms. Timbol added, noting the Department of Agriculture (DA) — Agricultural Credit Policy Council has so far been supportive to extend help to the agricultural sector through rural banks.

In June, Philguarantee approved credit guarantees worth P120 billion to encourage lenders to extend credit to small businesses seeking working capital.

The DA approved funding of P1 billion in April to go to loans aiding the sector to ensure food security. The funds fall under the Expanded Survival and Recovery Assistance Program for Rice Farmers.

In terms of measures implemented by the Bangko Sentral ng Pilipinas (BSP), Ms. Timbol said the central bank’s decision to count MSME loans as part of banks’ reserve requirement compliance has been helpful to rural lenders.

She added that the staggered booking of provisions for probable losses over five years and the exclusion from the past-due ratio of loans to affected borrowers for one year have also been helpful.

Earlier this month, BSP Governor Benjamin E. Diokno said P44.2 billion in MSME loans were used as alternative compliance by 88 banks, most of which were rural lenders.

The rural and cooperative banking industry’s net profit totaled P1.402 billion in the first quarter, down 5.07% year on year. — Luz Wendy T. Noble





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