The Bangko Sentral ng Pilipinas (BSP) called on banks and other lending institutions engaged in agricultural finance to continue working towards improving access to financial products and services by the agricultural sector, particularly small farmers and fishers.
In her message during the ACPC-COCAFM Conference for Banks and Other Lenders held at the Crown Plaza Hotel in Pasig City last July 8, 2011, BSP Inclusive Finance Advocacy Staff head Pia Tayag said that lenders can further strengthen their “partnership and look at meaningful ways by which we can make an even bigger difference in truly unlocking the potential of reaching the unbanked and underserved sectors in our country.”
Tayag also said that the forum, which was specifically designed for bankers and other lending institutions, only “demonstrates to us just how pivotal is the role of banks and other lending institutions in improving access to financial products and services by the agricultural sector, particularly the small farmers and fisherfolk.”
“Without your support, we cannot make significant progress in our efforts to reach the large population of unbanked in the country and promote a more inclusive financial system,” she stressed.
Thrift, rural, and cooperative banks – in their capacity as niche players – remain to be principal intermediaries of funds and investments to the agricultural sector, she said. Tayag added that rural banks, in particular, channel a significant portion of their lending to the agricultural sector. By the end of 2010, rural banks’ loans to the agricultural sector stood at P 34.7 billion, equivalent to 36.8 percent of their total loans.
Rural banks also had the highest overall rate of compliance with the requirements of the Agri-Agra Law (PD 717) with 35.6 percent, while thrift banks came in second at 27.6 percent.
Under PD 717, all banks are to set aside at least 25 percent of their total loanable funds for agricultural loans in general, of which at least 10 percent must be for agrarian reform beneficiaries.
“The BSP is working towards a more inclusive financial system, to which the policy to increase access to agricultural finance is closely tied,” Tayag furthered, adding that the BSP has new microfinance products and services available for the agriculture sector.
“Along this line, the BSP has created an enabling policy and regulatory framework that shall be the basis for pursuing financial inclusion initiatives, with the view of giving banks a wider scale and scope for their operations and therefore ensuring the steady flow of credit to various rural economic sectors, including agriculture.”
Recent issuances of the BSP on financial inclusion have focused on the following areas: broadening the products and services that can be offered by banks to meet the varying needs of the market; expanding the physical network and virtual reach of banks; addressing existing barriers that hinder the access to finance by the unserved and underserved market; and, developing market infrastructure to increase transparency and competition in the industry.
“Taken together, these regulatory initiatives serve as groundbreaking measures that can significantly boost our efforts to build a more inclusive financial system. In this endeavor, we are relying on the support of all major stakeholders in the financial sector,” exhorted Ms Tayag. (30)