BSP exhorts agri-lenders to improve credit access

Source: http://www.acpc.gov.ph/bsp_xport.html

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)

Agriculture Dept Honors Outstanding AGFP Conduits

The Department of Agriculture (DA) will conduct an awarding ceremony to give recognition to credit conduits for their contributions in expanding agriculture credit and productivity through agriculture guarantee.

As valued partners of the DA in making credit available, accessible and affordable to small farmers and fisherfolk, ten (10) conduits of the Agricultural Guarantee Fund Pool (AGFP) composed of cooperative banks, rural banks, cooperatives, small and medium enterprises (SMEs) and non-government organization/farmers’ organization (NGO/FO) will be awarded for their active participation in the program.

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Process Flow for AGFP

An eligible conduit MUST ESTABLISH A GUARANTEE LINE before any guarantee coverage.

The Credit Conduit must submit the following documentary requirements to establish a guarantee line:

1. Request for Guarantee Line
2. Board Resolution (for banks, cooperatives, FOs, NGOs, etc.)
3. Specimen Signature
4. Guarantee Agreement (signed by the conduit in all pages)
5. AGFP Implementing Rules and Regulations (IRR) (signed by the credit conduit in all pages)
6. Financial statements for the past three years and Interim Financial Statement
7. Basic Business Information (Company/Organization Profile)

A credit conduit with unexpired guarantee line may apply for guarantee coverage and must submit the following documentary requirements:

1. Request for guarantee coverage
2. Masterlist of sub-borrowers for guarantee coverage (USING AGFP FORMAT)
3. Proof of payment of guarantee fee*

* Guarantee coverage is deemed effective upon payment of the guarantee fee, provided that the conduit has an approved and unexpired guarantee line with the AGFP.

Agriculture guarantee fund reaches P3.68 billion

By Marianne V. Go Updated February 21, 2009 12:00 AM

Source: Philippine Star/philstar.com

MANILA, Philippines - Contributions to the Agricultural Guarantee Fund Pool (AGFP) from the National Government, government-owned and controlled corporations (GOCCs) and government financial institutions (GFIs) have reached P3.68 billion as of this month, Land Bank of the Philippines (LBP) president Gilda E. Pico said.

In a press briefing, Pico said with the AGFP, farmers and fisherfolks would be able to secure from credit conduits double or up to P7.36 billion worth of production loans for rice and other food crops.

Landbank is the institutional program manager of the AGFP.

The AGFP is a fund set up in compliance with Administrative Order 225-A requires all GOCCs and GFIs to hand over five percent of their respective net incomes to the AGFP for food productivity programs.

AGFP provides guarantee coverage to unsecured loans of small farmers and fisherfolk extended by credit conduits such as rural, thrift and cooperative banks, small and medium enterprises and large corporations, irrigators’ associations and other farmers’ organizations.

The guarantee would encourage the lending conduits to extend more credit to small farmers who are normally deemed to be high-risk borrowers.

To date, Pico said the approved guarantee line for 65 credit conduits amount to just P1.23 billion. As of September last year, only P366 milion was available under the AGFP.

The low contributions prompted Agriculture Secretary Arthur C. Yap to ask for the release of some P588 million supposedly committed to the AGFP.

The AGFP is intended for five years only, subject to review for extension as agreed upon by the DA and Landbank.

AGFP funds could be availed of by rural banks, thrift banks, irrigators associations (IAs), rice millers and grains traders to guarantee loans of small farmers engaged in rice production.

Farmers tilling a maximum of five hectares each and who have not been able to obtain collateral-free credit from the formal banking sector can borrow from government or private financial institutions with up to 85 percent of their loans secured through the AGFP.

The AGFP extends guarantee cover to eligible loans or financing exposures of eligible institutions of up to 85 percent of the loan or financing principal and a guarantee fee of only three percent per annum of the amount covered by the AGFP.

SORRY FOR THE INCONVENIENCE

Relative to the recent developments with the AGFP the documents posted in the site were removed and are for revisions. Please bear with us. We will be posting the revised documents once approved. Thank you very much.

LANDBANK Encourages Credit Conduits to Expand Assistance to Palay Farmers Through AGFP

Source: LANDBANK website

The Land Bank of the Philippines (LANDBANK) urges rural banks and farmer organizations across the country to avail of the guarantee coverage provided for by the Agricultural Guarantee Fund Pool (AGFP) in further expanding rice production loans to small farmers.

The AGFP, sourced from the contributions of several government-owned and controlled corporations (GOCCs) and government financial institutions (GFIs), is a fund set up in compliance with the Administrative Order No. 225-A, series of 2008. It shall provide guarantee coverage to unsecured loans of small farmers extended by credit conduits like Countryside Financial Institutions (CFIs), Farmer Organizations (FOs), Small and Medium Enterprises (SMEs), and large corporations so they will be further encouraged to lend to the agricultural sector.

“This is the first program we have undertaken together with DA geared at helping CFIs. The AGFP is in line with the national government’s agricultural productivity program,” LANDBANK President and CEO Gilda E. Pico said during the recently held Recognition of Outstanding LANDBANK Assisted CFI Partners for 2007.

To date, P366 million has been remitted to the Fund. Aside from LANDBANK which contributed P 100 million to AGFP, the other participating GOCCs and GFIs include Development Bank of the Philippines, Philippine Amusement and Gaming Corporation, National Power Corporation, Philippine National Oil Company, Metropolitan Waterworks and Sewerage System, Local Water Utilities Administration, Philippine Economic Zone Authority, Philippine Charity Sweepstakes Office, Trade and Investment Development Corporation, and National Electrification Administration.

LANDBANK acts as the institutional manager of the AGFP. The Program will be implemented initially for five years, subject to review for extension as agreed upon by DA and LANDBANK.

LANDBANK, in coordination with the Department of Agriculture, has conducted road shows in Bataan, Zambales, Bulacan, and Pampanga to promote the AGFP. More information dissemination activities will be scheduled in areas outside Metro Manila to reach potential availers of AGFP.

Administrative Order No. 225-A

Administrative Order No. 225-A established the Agricultural Guarantee Fund Pool (AGFP).

Click here to see the contents of the said order.