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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Eighteenth Congress
First Regular Session

HOUSE BILL NO._6425

Introduced by Representative Sharon S. Garin

EXPLANATORY NOTE

Section 2 of Republic Act No. 10000, otherwise known as the “Agri-Agra
Reform Credit Act of 2009, "provides:

“It is hereby declared the policy of the State to promote equal
access to opportunities under an environment of sustained growth and
expanding productivity as the key to raising the quality of life for
all. Towards this end, the State shall promote rural development by
enhancing access of the rural agricultural sector to financial services
and programs that increase market efficiency and promote
modernization in the rural agricultural sector.”

Section 6 of the same Act also provides:

“All banking institutions, whether government or private, shall
set aside at least twenty-five percent (25%) of their total loanable
Sunds for agriculture and fisheries credit in general, of which at least
ten percent (10%) of the loanable funds shall be made available for
agrarian reform beneficiaries mentioned in Section 5 hereof.”

However, BSP records show that as of end of 2018, banks have only
extended P707.4 billion worth of loans to the agricultural sector, comprising of
56.97% of the P1.241 trillion they were required to lend out to beneficiaries. By
the end of 2017, the required loans amounted to only P573.69 billion, roughly half
of the total of P1.034 trillion if all banks were compliant. A consolidation of the

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loan allocation would work to broaden the area with which the financial
institutions may comply with the requirements of the same Act.

Section 10 of the same Act further provides:

“The BSP shall impose administrative sanctions and other
penalties on the lending institutions for noncompliance with the
provisions of this Act. Penalties on noncompliance shall be computed
at one-half of one percent (0.5%) of noncompliance and
undercompliance and shall be directed to the development of the agri-
agra sector. Ninety percent (90%) of the penalties collected shall be
allocated between the AGFP and the PCIC according to the needs of
the agri-agra sector as provided for in the implementing rules and
regulations of this Act and the remaining ten percent (10%) shall be
given to the BSP to cover administrative expenses.”

Most banks are not willing to follow the requirement of Republic Act No.
10000, choosing, instead, to pay the penalties as provided in Section 10. While the
State recognizes the right of financial institutions to implement a sound lending
policy, the duty to obey the mandates of the law, with utmost good faith, is of
paramount importance. Therefore, it is deemed proper to implement a four-fold
increase of the percentage of penalty from 0.5% to 2%.

The agricultural and fisheries sector have not been able to fully avail of the
credit services as imposed by law on banks and other financial institutions. This is
due to the imposition of strict requirements and high standards on the borrowers’
ability to settle loans, which the agricultural and fisheries sectors simply cannot
comply with. Thus, the twenty-five percent (25%) requirements is not met, which
is detrimental to the development of the agricultural and fisheries sector.

This bill seeks to encourage such institutions to implement measures aimed
at realizing the purposes of the law and the development of the agriculture and
fisheries sector.

‘Thus, the immediate passage of this bill is necessary.

'S. GARIN

‘ KAMBISOWA PARTY-LIST


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Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City, Metro Manila

Eighteenth Congress
First Regular Session

HOUSE BILL NO. 6425

Introduced by Representative Sharon S. Garin

AN ACT

CONSOLIDATING THE LOAN ALLOCATION PROVIDED FOR
AGRICULTURE, FISHERIES, AND AGRARIAN REFORM
BENEFICIARIES, AND INCREASING THE PENALTIES ON LENDING
INSTITUTIONS FOR NON-COMPLIANCE AND UNDERCOMPLIANCE
AMENDING FOR THE PURPOSE REPUBLIC ACT NO. 10000,
OTHERWISE KNOWN AS THE“AGRI-AGRA REFORM CREDIT ACT OF
2009”

Be it enacted by the Senate and the House of Representatives of the Philippines in
Congress assembled:

SECTION 1. Section 6 of Republic Act No. 10000 is hereby amended to
read as follows:
“SEC. 6. Credit Quota.— All banking institutions, whether
government or private, shall set aside at least twenty-five percent (25%)

of their total loanable funds for agriculture,fand] fisheries [ereditin

be-made-available-for|AND agrarian reform beneficiaries mentioned in


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Section 5 hereof: Provided, however, That total loanable funds as used
in this section shall refer to funds generated from the date of effectivity
of this Act: Provided, further, That the twenty-five percent (25%) credit
quota is subject to a joint review by the Department of Agriculture
(DA), the Department of Agrarian Reform (DAR) and the Bangko
Sentral ng Pilipinas (BSP) after three (3) years of implementation to
determine whether the law has been effective in accomplishing its
goals. The findings shall be submitted to Congress.”
SEC. 2. Section 10 of the same Act is hereby amended to read as follows:
“SEC. 10. Penalty Clause. —The BSP shall impose
administrative sanctions and other penalties on the lending institutions
for noncompliance with the provisions of this Act. Penalties on
noncompliance shall be computed at [one-half-ef one-percent-{0-5%)]
TWO PERCENT (2%) of noncompliance and undercompliance and
shall be directed to the development of the agri-agra sector. Ninety
percent (90%) of the penalties collected shall be allocated between the
AGFP and the PCIC according to the needs of the agri-agra sector as
provided for in the implementing rules and regulations of this Act and
the remaining ten percent (10%) shall be given to the BSP to cover

administrative expenses.”


SEC. 3. All laws or parts thereof, decrees, orders, rules and regulations
inconsistent with the provisions of this Act are hereby repealed or modified
accordingly.

SEC. 4. This Act shall take effect fifteen (15) days following its publication
in a newspaper of general circulation or in the Official Gazette, whichever comes
first.

Approved,