EIGHTEENTH CONGRESS OF THE 
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REPUBLIC OF THE PHILIPPINES 
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Second Regular Session 
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SENATE
Senate Bill No. 1924
of tl;r
20 NOV 19 P3 S2
REC£;v'.;OF,-
INTRODUCED BY SENATOR CHRISTOPHER LAWRENCE "BONG" T. GO
AN ACT
MANDATING BANKING INSTITUTIONS TO STRENGHTHEN THE FINANCING 
SYSTEM FOR AGRICULTURAL, FISHERIES AND RURAL DEVELOPMENT IN THE 
PHILIPPINES
EXPLANATORY NOTE
The agricultural and fisheries sectors play an Important role in the country's 
economic and social aspect, particularly on the supply of food products while providing 
jobs for Filipinos. Being the life and blood of the country, the enhancement of the 
financing system of the agricultural, fisheries and rural sector has become critical to 
maintain its productivity and efficiency.
Republic Act No. 10000, otherwise known as the Agri-Agra Reform Act of 2009, 
was designed to extend credit access. Investments and grants to farmers and fisherfolk 
who are among the most poverty-stricken individuals due to the lack of funds in 
purchasing farming equipment and inputs. While the merit and objective of the law are 
admirable, its main purpose did not materialize since farmers and fisherfolk, considering 
the lack of means and mechanism to add value to their produce, remained a low income, 
underprivileged, high-risk market.
Consequently, as the law required banks to lend credit to farmers and fisherfolk, 
banks faced hardship in investing in an industry perceived to be plagued with risks. The


goal to enhance the industry fell short and our farming sector continues to suffer without 
any means to alleviate it.
In iine with the present condition, this measure seeks to institutionalize a 
framework that is more responsive to the needs of the agricuiturai sector whiie also 
providing means for the banking industry to take on a greater roie by not mereiy acting 
as credit providers but as stakehoiders in rural development as well. Furthermore, with 
the creation of a special fund designed specifically for capacity building, and 
encouragement of banking institutions to contribute to such fund as an alternative 
compliance with the mandatory credit allocation, the proposed measure will primarily 
strengthen the role of the financial sector as stakeholder and partner of the State in the 
nation's development.
With the reforms to the existing structure of the financial system for agricultural, 
fisheries and rural development, rural areas will now be able to have greater access to 
credit which will help the rural communities improve their welfare, competitiveness, 
income and productivity, particularly our farmer and fisherfolk. Hence, this measure 
promotes agricultural and fishery sector productivity and competitiveness, as well as 
sustainable development for rural communities.
In view of the foregoing, the approval of this bill is earnestly sought.
SENATOR CHRISTOR
LAWRENCE "BONG" T. GO


EIGHTEENTH CONGRESS OF THE 
)
REPUBLIC OF THE PHILIPPINES 
)
Second Regular Session 
)
SENATE
Senate Bill No. 1924
tj! tliv' .^:‘:rrfv«vi>
20 NOV 19 P3S2
RECEiVSOF- . ..
INTRODUCED BY SENATOR CHRISTOPHER LAWRENCE "BONG" T. GO
AN ACT
MANDATING BANKING INSTITUTIONS TO STRENGHTHEN THE FINANCING 
SYSTEM FOR AGRICULTURAL, FISHERIES AND RURAL DEVELOPMENT IN THE 
PHILIPPINES
Be It enacted by the Senate and the House of Representatives of the Philippines In 
Congress assembled:
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ARTICLE I
GENERAL PROVISIONS
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Section 1. Short Title. — This Act shail be known as "The Rural Agricuitural and 
Fisheries Financing Enhancement System Act."
Sec. 2. Declaration of Policy. — It is hereby declared the policy of the State to 
promote Inclusive and broad-based economic growth by ensuring 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 rural communities and agricultural and fisheries 
households to financial services and programs that Increase productivity, enhance market 
efficiency, promote modernization and improve the welfare and economic prospects of 
beneficiaries in rural communities through active participation of banking institutions.
Sec. 3. Definition of Terms. — As used in this Act, the following terms shall mean:


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(a) Agrarian Reform Beneficiary (ARB) - refers to a farmer who was granted land 
under Presidential Decree No. 27, the Comprehensive Agrarian Reform Law 
and Republic Act No. 9700 or the "Comprehensive Agrarian Reform Extension 
with Reforms" and a regular farm worker who is landless, irrespective of 
tenurial arrangement, who benefited from the redistribution of land, regardless 
of crops or fruits produced, to include the totality of factors and support 
services designed to lift the economic status of the beneficiary and all other 
alternative arrangements to the physical distribution of lands, such as 
production or profit sharing, labor administration, and the distribution of shares 
of stock which will allow the beneficiary to receive a just share of the fruits of 
the lands one works. The term shall also include registered agrarian reform 
beneficiaries' cooperatives/associations/other farm groups, respectively 
endorsed as comprising of agrarian reform beneficiaries by the nearest office 
of the DAR, as well as ARB households.
(b) Agrarian Reform Community (ARC) - refers to a barangay or a cluster of 
barangays primarily composed and managed by agrarian reform beneficiaries 
who shall be willing to be organized and undertake the integrated development 
of an area and/or their organizations/cooperatives.
(c) Agri-Business - refers to agriculture and fishery-related activities that put 
farmers, fisherfolk processors, distributors, and consumers within a system that 
produces, processes, transports, markets, and distributes agricultural and 
fishery products. It encompasses input production, farm and fishery operations 
and management, equipment and supplies manufacturing, food/non-food 
processing, trading, and retailing.


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(d) Agri-Tourism, also referred to as "Farm Tourism" under Republic Act No. 10816 
- refers to the practice of attracting visitors and tourists to farm areas for 
production, educational and recreational purposes. It involves any agricultural- 
or fishery-based operation or activity that brings to a duly-accredited farm 
tourism camp, visitors, tourists, farmers and fisherfolk who want to be 
educated and trained on farming and its related activities.
(e) Agricultural Lessee - refers to any person who, with or without help from 
his/her immediate farm household, cultivates the land owned by another for a 
certain price in money, in produce, or in both.
(f) Agricultural or Fisheries Household - a household is considered to be an 
agricultural or fisheries household when at least one member of the household 
is a farmer, a fisherman, an agrarian reform beneficiary, a settler, an 
agricultural lessee, an amortizing owner, a farmworker, a fishworker, an owner- 
cultivator, a compact farmer, or a tenant farmer.
{%) Agricultural Value Chain (AVC) - refers to a set of actors/players, such as 
producers (farmers, fisherfolks), traders, suppliers, processors, aggregators, 
who conduct linked sequence of value-adding activities involved in converting 
an agricultural product from its raw material to final form and bringing it to 
consumers.
(h)Agricultural Value Chain Financing (AVCF) - refers to financing to an AVC 
following the identification and analysis of AVC and the design of appropriate 
financial products and services for actors/ players that form part of the AVC.


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(i) Agro-Industry Modernization Credit and Financing Program (AMCFP) - refers 
to the umbrella credit/financing program of the government for the agriculture 
and fisheries sector created under Republic Act No. 8435.
(j) Amortizing Owners - refer to landowners who amortize payment for the land 
to a private Individual or to the State.
(k) Compact Farmers - refer to those farmers with adjoining farms operating as a 
single unit under one management, farm plan and budget.
(l) Farmer - refers to a natural person whose primary livelihood is cultivation of 
land or the production of agricultural crops, agroforest products, or livestock, 
either by oneself, or primarily with the assistance of their immediate farm 
household, whether the land is owned by them or by another person under a 
leasehold or share tenancy agreement or arrangement with the owner thereof.
(m) 
Farmworker - refers to a natural person who renders service for value as 
an employee or laborer In an agricultural enterprise or farm regardless of 
whether their compensation is paid on a daily, weekly, monthly or "pakyawll 
basis. The term Includes an individual whose work has ceased as a 
consequence of, or In connection with, a pending agrarian dispute who has not 
obtained a substantially equivalent and regular farm employment.
(n) Farmers' Cooperatives - refer to organizations composed primarily of small 
agricultural producers, farmers, farmworkers, or other agrarian reform 
beneficiaries who voluntarily organize themselves for the purpose of pooling 
land, manpower, technological, financial or other economic resources, and 
operate on the principle of one member, one vote. A juridical person may be a 
member of a cooperative, with the same rights and duties as a natural person.


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(o) Fanner's and Fisherfolkis Organizations or Associations - refer to farmer's and 
fisherfolkis cooperatives, associations or corporations duly registered with 
appropriate government agencies and which are composed primarily of small 
agricultural producers, farmers, farmworkers, agrarian reform beneficiaries, 
fisherfolk who voluntarily join together to form business enterprises or non­
business organizations which they themselves own, control and patronize.
(p) Farm-To-Market Road - refers to a road linking the agriculture and fisheries 
production sites, coastal landing point and post-harvest facility to the market 
and arterial road and highway.
(q) Financial Services - refer to services extended by banks/financial institutions 
such as, but not limited to, credit/lending, deposits, rediscounting, and 
insurance.
(r) Fisherfolk - refers to people directly or personally and physically engaged in 
catching and/or culturing and processing fishery and/or aquatic resources.
(s) FIshworker - refers to a person whether or not regularly employed in 
commercial fishing and related industries, whose income is either from wages, 
profit sharing or stratified sharing basis, including those working in fishpens, 
fish corral/traps, fishponds, prawn farms, sea farms, salt beds, fish ports, 
fishing boat or trawlers, or fish processing and/or packing plants, but excluding 
administrators, security guards and overseers.
(t) Green Finance - refers to financial services and products designed to promote 
the flow of finance towards green economic activities and projects. Aside from 
financing to promote climate change adaptation and mitigation, green finance


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also covers environmental improvement and efficiency improvement in natural 
capital preservation and resource mobilization.
(u) M!cro/ Small and Medium Enterprise (MSME) - refers to any business activity 
or enterprise defined as such under existing laws.
(v) Newly-Established Bank - refers to a domestic or foreign bank without banking 
presence in the Philippines prior to the issuance of its certificate of authority to 
operate. It shall not include banks that have been formed through the 
acquisition, purchase of ownership of the voting stock of an existing domestic 
bank or the merger or consolidation of banks.
(w) 
Owner-Cultivators - refer to natural persons who own lands by purchase, 
inheritance, or land distribution by the State. Owner-Cultivators can operate 
the farm themselves, supervise wage labor or delegate operations to farmers.
(x) Philippine Crop Insurance Corporation (PCIC) - refers to a government-owned 
and controlled corporation which provides insurance protection to the country's 
agricultural producers, particularly the subsistence farmers against crop losses 
arising from natural calamities such as typhoons, rising sea levels, floods, 
drought, earthquakes, volcanic eruptions, plant diseases and pest infestation, 
and non-crop agricultural asset losses due to perils for which the asset has 
been insured against.
(y) Post-Harvest Activities - refer to threshing, drying, milling, grading, storing, 
and handling of produce and such other activities of a similar nature such as 
stripping, winnowing, chipping and washing.
(z) Post-Harvest Facilities - refer to threshers, moisture meters, dryers, weighing 
scales, milling equipment, fish ports, fish landings. Ice plants and cold storage


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facilities, processing plants, warehouses, buying stations, market infrastructure 
and transportation facilities, and such other facilities, supporting post-han/est 
activities.
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(aa) Public Rural Infrastructure - refers to infrastructure in rural communities 
such as highways, streets, bridges, tunnels, railways, railroad, transport 
systems, ports, airports, hydropower projects, canals, dams, irrigation, 
government buildings and housing projects, public schools, public hospitals, 
public health centers, public markets, slaughterhouses, warehouses, solid 
waste management, sewerage, flood control, drainage, dredging and other 
similar infrastructure projects.
(bb) Rural Community-refers to areas that are defined as such by the Philippine 
Statistics Authority (PSA).
(cc) Rural Financial Institution (RFI) - refers to any financial institution 
established and is operating in a rural community.
(dd) Settlers - refer to persons who range from the forest-clearing pioneers, 
including indigenous people, with a subsistence economy to the better 
equipped and more experienced farmers.
(ee) Tenant Farmer-refers to one who cultivates another's land under a sharing 
or leasehold agreement.
ARTICLE II
AGRICULTURAL FISHERIES AND RURAL FINANCING SYSTEM


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Sec. 4. Agriculture, Fisheries and Rural Financing System. — There shall be an 
agricultural, fisheries and rural financing system to improve the welfare, competitiveness, 
income and productivity of the rural community beneficiaries, particularly the farmers, 
fisherfolk, agrarian reform beneficiaries, agrarian reform communities, settlers, 
agricultural lessees, amortizing owners, farmworkers, fishworkers, owner-cultivators, 
compact farmers, tenant farmers, and members of their households and their MSMEs, as 
well as farmers' and fisherfolk's cooperatives, organizations and associations, through 
government and private banking institutions.
Agricultural, fisheries and rural financing, as used herein, shall consist of loans, 
investments and grants to finance activities that shall enhance productivity and increase 
income of an agricultural and fisheries household, thereby promoting agricultural sector 
productivity and competitiveness, as well as sustainable development of rural 
communities. These shall include, but not be limited to, activities identified under the 
AMCFP as enumerated under Chapter 3 Section 23 of Republic Act No. 8435, off- 
farm/fishery activities, agricultural mechanization/ modernization, agri-tourism, green
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finance projects, acquisition of lands authorized under the Agrarian Reform Code of the
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Philippines and Its amendments, efficient and effective marketing, processing, distribution 
and storage of agricultural and fishery commodities, public rural infrastructure, as well as 
programs that shall address the developmental needs of rural communities, such as, but 
not limited to, projects that promote the livelihood, skills enhancement, and other 
capacity-building activities of the rural community beneficiaries and ali other activities 
consistent or analogous to the foregoing, as may be determined by the Agricultural and 
Fisheries Finance and Capacity-Building Council (AFFCC).
Sec. 5. Rural Community Beneficiaries. — The financing mentioned in the 
preceding section shall be extended to the rural community beneficiaries named therein 
or to cooperatives, associations, MSMEs or organizations in good standing of such 
beneficiaries, regardless of capitalization based on the feasibility of the project and their 
paying capacity, their estimated production, and/or securities they can provide as well as


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such assets as may be acquired by them from the proceeds of the loan, investments and 
grants.
Sec. 6. Credit Quota. — All banking Institutions, whether government or private, 
except newly established banks for a period of five (5) years from date of commencement 
of the banks' operations, shall set aside a credit quota, or a minimum mandatory 
agricultural and fisheries financing requirement of at least twenty-five percent (25%) of 
their total loanable funds.
The total loanable funds generated by a banking institution shall be defined by the 
BSP. During the first year of effectivity of this Act, the total loanable funds generated
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shall be computed starting from 20 April 2010, the effectivity of Republic Act No. 10000,
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alter which the bank's total loanable funds shall be determined based on funds generated 
starting from the second year of effectivity of this Act.
Sec. 7. Modes of Compliance. — Banks may comply with the mandatory credit 
requirement by lending to rural community beneficiaries, to finance agricultural and
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fishery-related activities identified under the AMCFP as enumerated under Chapter 3
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Section 23 of Republic Act No. 8435, off-farm/fishery activities, agricultural 
mechanization/modernization, agri-tourism, green finance projects, marketing, 
processing, distribution and storage of agricultural and fishery commodities, livelihood 
projects, skills enhancement or capacity-building programs.
Banks may also comply with the mandatory financing requirement through other 
means as follows:
a) Invest in debt securities. Including those issued by the Development Bank 
of the Philippines (DBP) and the Land Bank of the Philippines (LBP): 
Provided, That the proceeds from said debt securities shall be used to 
finance activities under Section 4 hereof: Provided, further. That the


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proceeds from debt securities issued by the DBP and the LBP shall be 
separately accounted for and shall not be considered for purposes of 
computing the loanable funds under Section 6 hereof of the said banks;
b) 
Open deposit accounts with rural financial institutions: Provided, That the 
deposit accounts shall be separately accounted for by the depository bank 
and shall not be considered for purposes of computing the loanable funds 
under Section 6 hereof of the said banks;
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Rediscount with banks eligible paper covering agriculture, fisheries and 
agrarian reform credits: Provided, That rediscounted paper shall no longer 
be eligible as compliance on the part of the originating bank;
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Invest directly in shares of stock of rural financial institutions, subject to 
prevailing laws, rules or regulations or lend wholesale to rural financial 
institutions: Provided, That the wholesale loans shall be credited as 
compliance of the bank acting as wholesale lender alone;
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Lend for the construction and upgrading of infrastructure, including but not 
limited to, farm-to-market roads, as well as the provision of post-harvest 
facilities and other public RURAL infrastructure that will benefit the 
agriculture, fisheries and agrarian reform sector; f) Lend to agri-business 
enterprises that maintain agricultural commodity supply-chain 
arrangements directly with rural community beneficiaries;
f) 
Undertake agricultural value chain financing to actors/ players in the AVC 
that benefits rural communities; and
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g) Invest in shares of stock of the PQC or in companies that primariiy engage 
in activities under Section 4 hereof that benefit rurai community 
beneficiaries:
Provided That, the ioans and investments that are counted as compliance are not 
funded by proceeds from the issuance of debt securities, and/or iending of other banks 
that have been counted as compliance with the mandatory credit: Provided Further, that 
loans to finance activities that shall generally benefit agrarian reform beneficiaries, 
agrarian reform communities, or other priority sectors, as may be determined by the 
AFFCC, shall be counted at not more than ten times (lox) their outstanding amount, or 
as otherwise prescribed by the BSP, for purposes of determining compliance with the 
mandatory agricultural and fisheries financing requirement.
Sec. 8. The modes of compliance enumerated in the preceding section shall be 
subject to review by the AFFCC alter implementation to determine whether these are 
adequate to support the financing requirements of rural communities and recommend to 
Congress for appropriate action.
Sec. 9. Annual Reports. — The BSP shall furnish reports on the compliance with 
the mandatory agricultural and fisheries financing requirement to the Congress on a 
yearly basis. The BSP shall, as part of its regulatory functions, monitor the compliance by 
the banks with the requirements of this Act.
Sec. 10. Penalty Oause. — The BSP shall impose administrative sanctions and 
other penalties on the lending institutions for violation of any of the provisions of this Act. 
Penalties on noncompliance or under-compliance with the mandatory agricultural and 
fisheries financing requirement shall be computed at one-half of one percent (0.5%) of 
non-compliance or undercompiiance, or at rates prescribed by the BSP Monetary Board. 
Upon collection of the penalties, the BSP shall remit the same to the AFFCC for deposit
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to the special fund created under Article III of this Act. Ten percent (10%) of the penalties 
collected shall be retained by the BSP to cover administrative expenses.
ARTICLE III
AGRIBUSINESS MANAGEMENT CAPACITY AND INSTITUTION-BUILDING
FUND AND PROGRAM
Sec. 11. There shall be created an Agribusiness Management Capacity And 
Institution-Building Fund (Special Fund) to finance agricultural- and fishery-related 
activities as well as organizational capacity- and institution-building programs of 
cooperatives and other duly-registered organizations of rural agricultural and fisheries 
households. The Special Fund shall be sufficient to ensure effective implementation of
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the aforementioned activities and programs. For this purpose, banks may comply with
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the mandatory credit requirement by providing contributions to the Special Fund.
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Sec. 12. The initial amount of the Special Fund shall at least be PIO billion and
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shall include penalties due from banks on their non-compliance or under-compliance with
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the mandatory AgriAgra credit requirement under Republic Act No. 10000, collected alter
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the effectivity of this Act, net of the ten (10) percent amount to be retained by the BSP. 
In case of a shortfall, the banks shall advance a maximum amount of P2 billion, which 
shall be chargeable against future penalties under this Act, and shall not be considered 
as a mode of compliance under Section 11 hereof.
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Sec. 13. The AFFCC shall enter into an agreement with the banking industry on 
the management of the Special Fund as well as the implementation of the activities and 
programs of the Special Fund, in accordance with the approval of and guidelines 
prescribed by the AFFCC. The agreement shall also require the banking industry to 
monitor and evaluate the activities financed by the Special Fund, and report its findings 
to the AFFCC.
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Sec 14. Banks, duly-registered training and capacity-building organizations,
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cooperatives and other duly-registered organizations of, or that support rural agricultural
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and fisheries households may apply with the AFFCC for funding for their capacity and
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institution-building programs and activities.
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ARTICLE IV
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AGRICULTURAL AND FISHERIES FINANCE AND CAPACITY-BUILDING
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COUNCIL (AFFCC)
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Sec. 15. Agricultural and Fisheries Finance and Capacity-Building Council (AFFCC).
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— There shall be created an Agricultural and Fisheries Finance and Capacity- Building
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Council (AFFCC) which shall be composed of the designated representatives of the
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following agendes/groups/sectors:
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the Department of Agriculture (DA), as Chair;
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2. 
the Bankers Association of the Philippines (BAP), as Vice Chair;
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3. 
the Bangko Sentral ng Pilipinas (BSP);
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4. 
the Department of Agrarian Reform (DAR);
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the Cooperative Development Authority (CDA);
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6. 
the Land Bank of the Philippines (LBP);
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the Development Bank of the Philippines (DBP); and
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8. 
Nine (9) representatives from the private sector as members, one of whom
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shall be appointed as Vice-Chair. The private sector representatives shall include
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the heads, or their designated representatives of the Rural Bankers Association of
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the Philippines (RBAP); the Chamber of Thrift Banks (CTB); the Cooperative Banks
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Federation of the Philippines (BANGKOOP); the Microfinance Council of the
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Philippines, Inc. (MCPI); the Philippine Chamber of Commerce and Industry
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(PCCI); and a representative each from the cooperative sector, the farmers, and
the fisherfolk sector.
Sec. 16. Powers/ Duties and Functions of the AFFCC. — The AFFCC shall have the 
following powers, duties, and functions:
a) 
to set the target amount for the Special Fund to meet the organizational- 
and capacity building requirements of cooperatives and other duly- 
registered organizations of rural agricultural and fisheries households over 
a period of ten (10) years;
b) 
to determine the annual requirement of the Special Fund;
c) 
to identify eligible recipients of the Special Fund;
d) 
to Identity eligible agricultural- and fishery-related activities and capacity 
building programs that may be financed by the Special Fund;
e) 
to ensure the effective implementation and programs financed by the 
Special Fund;
f) 
to periodically assess the adequacy of the fund capital in financing the 
capacity-building requirements of rural cooperatives and other duly- 
registered organizations of rural agricultural and fisheries households; and
g) 
to ensure compliance with the reporting, monitoring, evaluation and audit
requirements of the Special Fund and activities financed.
ARTICLE V
MISCELLANEOUS PROVISIONS
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Sec. 17. Audit — The Special Fund shall be audited by the Commission on Audit
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(COA) in accordance with existing auditing laws, rules and regulations.
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Sec. 18. Oversight Committee. — There shall be an oversight committee to oversee
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the implementation of this Act composed of the following:
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1. 
A Member of the House of Representatives to be designated by the House 
of Representatives as Chair;
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A Member of the Senate to be designate by the Senate as Vice-Chair;
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A representative from the Office of the President; and
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3. Two representatives from the Commission on Audit (COA)
Sec. 19. Sunset Provisions.—Vne provisions related to the mandatory credit quota
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under Article II as well as the management and administration of the special fund under
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Article III shall cease to have effect, ten (10) years from approval of this Act.
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Sec. 20. Repeaiing Ciause. — The provisions of Republic Act No. 10000, Executive
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Order No. 113 and any other laws, presidential decrees, executive orders, rules and
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regulations, or parts thereof inconsistent with the provisions of this Act are hereby
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repealed or modified accordingly.
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Sec. 21. Separabiiity Ciause. — If any part, section or provision of this Act is held
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invalid or unconstitutional, other provisions not affected thereby shall remain in force and
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effect
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Sec. 22. Transitory Provision. — The BSP shall promulgate such rules and
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regulations as may be necessary to Implement Articles I and II of this Act within ninety
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(90) days after effectivlty of this Act. Prior to the effectivlty of the Implementing rules and
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regulations of Articles I and II of this Act, the provisions of Republic Act No. 10000 shall
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remain In force.
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The BSP shall organize a Task Force which shall promulgate such rules and 
regulations as may be necessary to Implement Articles III and IV of this Act within ninety 
(90) days after effectivlty of this Act.
SEC. 23. Effectivlty. — This Act shall take effect fifteen (15) days after its 
publication in the Official Gazette or in a newspaper of general circulation.
Approved,
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