Republic of the Philippines < FEPRESES
HOUSE OF REPRESENTATIVES
© ecelve

Quezon City

Eighteenth Congress
First Regular Session

HOUSE BILLNO.___§939

Introduced by Representative JOEY SARTE SALCEDA

AN ACT
MANDATING BANKING INSTITUTIONS TO STRENGTHEN THE
FINANCING SYSTEM FOR AGRICULTURAL, FISHERIES AND
RURAL DEVELOPMENT IN THE PHILIPPINES,
AND FOR OTHER PURPOSES

EXPLANATORY NOTE

The spirit of Republic Act No. 10000, or the Agri-Agra Reform Act of 2009, sought to
extend credit access to farmers and fisherfolk, who are among the most financially-vulnerable
and the most unbanked sectors of the population. While the intent of the law was laudable, it
did not succeed in its objectives primarily due to the fact that farmers and fisherfolk, in the
absence of mechanisms and the economic environment to add value to their produce, remained
a low-income, high-risk credit market. Because the law required banks to lend set levels of
credit to farmers and fisherfolk, it also forced banks to choose between giving out high-risk
loans or become non-compliant with national policy. Both choices imply risks to the stability
of the financial sector.

To address this situation, the Bangko Sentral ng Pilipinas (BSP) has advocated for
reforms that will expand the market for Agri-Agra loans to include programs and projects that
create value in rural communities. Such reforms will both address the concerns of banks and
solve the main cause of the failure of the 2009 law — the lack of income-sustaining value chains
for farmers and fisherfolk.

Furthermore, such reforms would induce broad-based, inclusive, and forward-thinking
growth in rural communities by extending credit access to programs and projects that align
with a more modern vision for agriculture — one that does not focus only on volume of produce,
but also on value created by the agricultural sector.

This representation fully supports these reforms, which are reflected in full in this
proposal.


This representation, however, also believes that financial inclusion is also critical in
ensuring that farmers and fisherfolk are a more attractive credit market. After all, farmers and
fisherfolk will not have access to credit if they do not have access to financial services in
general.

This bill therefore includes missionary financial inclusion initiatives, which could
include virtual banking for farmers and fisherfolk, among programs and projects that are
eligible for Agri-Agra loans.

Furthermore, this representation recognizes that this reform, like the law that it reforms,
is an exercise in policy experimentation. We believe that it will not do harm, but we have yet
to see with certainty that the reform will work. Thus, this bill subjects the implementation of
the provisions of this proposal to congressional oversight, to ensure that policymakers are
responsive to possible needs and opportunities for enhancements to this reform.

With the basic reform advocated for by the BSP as part of its financial stabilization and
Road to A-Credit Rating strategy, and with the enhancements that this representation
introduced to make the reform more impactful and inclusive, it is anticipated that greater rural
access to credit will support the public investments being made by the government towards
rural development.

This reform will also complement the Virtual Banking Act and the Financial Consumer

Protection Act filed by this representation to stabilize the financial sector, promote consumer
welfare, and accelerate financial inclusion.

In view of the foregoing, the approval of this bill is urgently sought



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

Eighteenth Congress
First Regular Session

HOUSE BILL NO. 6039

Introduced by Representative JOEY SARTE SALCEDA

AN ACT
MANDATING BANKING INSTITUTIONS TO STRENGTHEN THE
FINANCING SYSTEM FOR AGRICULTURAL, FISHERIES AND
RURAL DEVELOPMENT IN THE PHILIPPINES,
AND FOR OTHER PURPOSES

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

ARTICLE I
GENERAL PROVISIONS

SECTION 1. Short Title. — This Act shall be known as “THE RURAL
AGRICULTURAL 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 PARTCIPATION OF BANKING INSTITUTIONS.

SEC. 3. Definition of Terms. — As used in this Act, the FOLLOWING terms SHALL
MEAN:

(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

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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 he/she 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.

(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.

(G) AGRICULTURAL VALUE CHAIN (AVC) REFERS TO A SET OF
ACTORS/PLA YERS, 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.

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.

(H) 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.

(J) Compact Farmers refer to those farmers with adjoining farms operating as a single
unit under one management, farm plan and budget.

(K) Farmer refers to a natural person whose primary livelihood is cultivation of land or
the production of agricultural crops, agroforest products, AND/OR livestock, either by
himself/herself, or primarily with the assistance of his/her immediate farm household, whether
the land is owned by him/her or by another person under a leasehold or share tenancy agreement
or arrangement with the owner thereof.

(L) 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 his/her compensation is
paid on a daily, weekly, monthly or "pakyaw” 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.

(M) 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.

(N) Farmer's and Fisherfolk's Organizations or Associations refer to farmer's and
fisherfolk's 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.

(O) 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.

(P) Financial Services refer to services extended by banks/financial institutions such as,
but not limited to, credit/lending, deposits, rediscounting, and insurance.

(Q) Fisherfolk refers to people directly or personally and physically engaged in
CATCHING and/or culturing and processing fishery and/or aquatic resources.


(R) 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.

(S) 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 ALSO COVERS
ENVIRONMENTAL IMPROVEMENT AND EFFICIENCY IMPROVEMENT IN
NATURAL CAPITAL PRESERVATION AND RESOURCE MOBILIZATION.

(T) MICRO, SMALL AND MEDIUM ENTERPRISE (MSME) REFERS TO ANY
BUSINESS ACTIVITY OR ENTERPRISE DEFINED AS SUCH UNDER EXISTING
LAWS.

(U) MISSIONARY RURAL FINANCIAL INCLUSION REFERS TO ANY
PROGRAM OR PROJECT WHICH SEEKS TO MAKE FINANCIAL SERVICES AND
PRODUCTS MORE ACCESSIBLE TO FARMERS AND FISHERFOLKS AND WHICH
CHARGES BENEFICIARIES FROM RURAL COMMUNITIES MINIMAL IF NOT NO
CHARGES FOR ITS SERVICES

(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 land 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-HAR VEST 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 FACILITIES, PROCESSING PLANTS,
WAREHOUSES, BUYING STATIONS, MARKET INFRASTRUCTURE AND

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TRANSPORTATION FACILITIES, AND SUCH OTHER FACILITIES, SUPPORTING
POST-HARVEST ACTIVITIES.

(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.

(AB) RURAL COMMUNITY REFERS TO AREAS THAT ARE DEFINED AS
SUCH BY THE PHILIPPINE STATISTICS AUTHORITY.

(AC) RURAL FINANCIAL INSTITUTION (RFI) REFERS TO ANY FINANCIAL
INSTITUTION ESTABLISHED AND IS OPERATING IN A RURAL COMMUNITY.

(AD) 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.

(AE) Tenant Farmer refers to one who cultivates another's land under a sharing or
leasehold agreement.

ARTICLE I
AGRICULTURAL FISHERIES AND RURAL FINANCING SYSTEM

SEC. 4. Agriculture, Fisheries and Rural Financing System. ~ There shall be AN
AGRICULTURAL, FISHERIES AND RURAL financing system to improve the WELFARE,
COMPETITIVENESS, FINANCIAL VIABILITY, 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 HOUSEHOLD AND THEIR MSMES, AS WELL
AS farmer's 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 FINANCE PROJECTS, MISSIONARY RURAL FINANCIAL
INCLUSION PROJECTS, acquisition of lands authorized under the Agrarian Reform Code of
the Philippines and its amendments, efficient and effective MARKETING, PROCESSING,

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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 ALL OTHER
ACTIVITIES CONSISTENT OR ANALOGOUS TO THE FOREGOING, AS MAY BE
DETERMINED BY THE AGRICULTURAL AND FISHERIES CAPACITY-BUILDING
FINANCE POLICY COUNCIL (AFCFPC).

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 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 SHALL BE COMPUTED
STARTING FROM 20 APRIL 2010, THE EFFECTIVITY OF REPUBLIC ACT NO. 10000,
AFTER 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 FISHERY-RELATED 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 FINANCE
PROJECTS, MISSIONARY RURAL FINANCIAL INCLUSION 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 proceeds from DEBT SECURITIES issued

6


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) 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;

(c) 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;

(d) 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 RURAL COMMUNITY;

(e) 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

(g) Invest in shares of stock of the PCIC OR IN COMPANIES THAT PRIMARILY
ENGAGE IN ACTIVITIES UNDER SECTION 4 HEREOF THAT BENEFIT RURAL
COMMUNITY BENEFICIARIES:

PROVIDED, THAT THE LOANS AND INVESTMENTS THAT ARE COUNTED
AS COMPLIANCE ARE NOT FUNDED BY PROCEEDS FROM THE ISSUANCE OF
DEBT SECURITIES, AND/OR LENDING 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 AFCFPC, SHALL BE COUNTED AT TEN TIMES (10X) 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 AFCFPC after 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 Clause. — 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 UNDERCOMPLIANCE shall be computed at one-half of one
percent (0.5%) of noncompliance OR undercompliance, OR AT RATES PRESCRIBED BY
THE BSP MONETARY BOARD. UPON COLLECTION OF THE PENALTIES, THE BSP
SHALL REMIT THE SAME TO THE AFCFPC FOR DEPOSIT 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 IL
AGRIBUSINESS MANAGEMENT CAPACITY AND
INSTITUTION-BUILDING FUND AND PROGRAM

SEC. 11. BANKS MAY ALSO COMPLY WITH THE MANDATORY CREDIT
REQUIREMENT BY PROVIDING CONTRIBUTIONS TO AN AGRIBUSINESS
MANAGEMENT CAPACITY AND INSTITUTION-BUILDING FUND (SPECIAL FUND)
TO FINANCE AGRICULTURAL- AND FISHERY-RELATED CAPACITY AND
INSTITUTION-BUILDING PROGRAMS OF RURAL COOPERATIVES AND OTHER
DULY-REGISTERED ORGANIZATIONS OF RURAL AGRICULTURAL AND
FISHERIES HOUSEHOLDS, TO IMPROVE THEIR VIABILITY AND PRODUCTIVITY.

THE AFCFPC SHALL ENTER INTO AN AGREEMENT WITH THE BANKING
INDUSTRY ON THE CONTRIBUTIONS AND MANAGEMENT OF THE SPECIAL FUND
AS WELL AS THE IMPLEMENTATION OF THE ACTIVITIES AND PROGRAMS OF
THE SPECIAL FUND, TN ACCORDANCE WITH THE APPROVAL OF AND
GUIDELINES PRESCRIBED BY THE AFCFPC. 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 AFCFPC.

SEC. 12. THE INITIAL CONTRIBUTION TO THE SPECIAL FUND SHALL
INCLUDE PENALTIES DUE FROM BANKS ON THEIR NONCOMPLIANCE OR
UNDERCOMPLIANCE WITH THE MANDATORY AGRI-AGRA CREDIT
REQUIREMENT UNDER REPUBLIC ACT NO. 10000, COLLECTED AFTER THE
EFFECTIVITY OF THIS ACT, NET OF THE TEN (10) PERCENT AMOUNT TO BE
RETAINED BY THE BSP. THE SAID AMOUNT SHALL NOT BE LESS THAN TEN
BILLION PESOS (PHP  10,000,000,000.00). ANY SHORTFALL SHALL BE
CONTRIBUTED BY THE BANKS.

SEC. 13. THE AFCFPC SHALL PERIODICALLY ASSESS THE ADEQUACY OF
THE FUND CAPITAL IN FINANCING THE AGRICULTURAL AND CAPACITY-
BUILDING REQUIREMENTS OF RURAL COOPERATIVES AND OTHER DULY-
REGISTERED ORGANIZATIONS OF RURAL AGRICULTURAL AND FISHERIES
HOUSEHOLDS.

SEC 14. BANKS, DULY-REGISTERED TRAINING AND CAPACITY-BUILDING
ORGANIZATIONS, RURAL AND AGRICULTURAL COOPERATIVES AND OTHER
DULY-REGISTERED ORGANIZATIONS OF RURAL AGRICULTURAL AND
FISHERIES HOUSEHOLDS MAY APPLY WITH THE AFCFPC FOR GRANT FUNDING


FOR THEIR AGRICULTURAL, CAPACITY AND _ INSTITUTION-BUILDING
PROGRAMS AND ACTIVITIES.

ARTICLE IV
AGRICULTURAL AND FISHERIES CAPACITY-BUILDING
FINANCE POLICY COUNCIL (AFCFPC)

SEC. 15. AGRICULTURAL AND FISHERIES CAPACITY-BUILDING FINANCE
POLICY COUNCIL (AFCFPC). - THERE SHALL BE CREATED AN AGRICULTURAL
AND FISHERIES CAPACITY-BUILDING FINANCE POLICY COUNCIL (AFCFPC)
WHICH SHALL BE COMPOSED OF: THE SECRETARY, DEPARTMENT OF
AGRICULTURE (DA), AS CHAIR; THE GOVERNOR, BANGKO SENTRAL NG
PILIPINAS (BSP); THE DIRECTOR-GENERAL, NATIONAL ECONOMIC AND
DEVELOPMENT AUTHORITY (NEDA), THE SECRETARY, DEPARTMENT OF
BUDGET AND MANAGEMENT (DBM); THE SECRETARY, DEPARTMENT OF
AGRARIAN REFORM (DAR); THE SECRETARY, DEPARTMENT OF FINANCE (DOF);
THE SECRETARY, DEPARTMENT OF TRADE AND INDUSTRY (DTI), THE
PRESIDENT, LAND BANK OF THE PHILIPPINES (LBP); THE PRESIDENT,
DEVELOPMENT BANK OF THE PHILIPPINES (DBP); THE PRESIDENT, PHILIPPINE
INSTITUTE FOR DEVELOPMENT STUDIES (PIDS), AND ELEVEN (11)
REPRESENTATIVES FROM THE PRIVATE SECTOR, ONE OF WHOM SHALL BE
APPOINTED AS VICE-CHAIRMAN, AS MEMBERS. THE PRIVATE SECTOR
REPRESENTATIVES SHALL INCLUDE THE PRESIDENT, RURAL BANKERS
ASSOCIATION OF THE PHILIPPINES (RBAP), THE PRESIDENT, CHAMBER OF
THRIFT BANKS (CTB); THE CHAIR, COOPERATIVE BANKS FEDERATION OF THE
PHILIPPINES (BANGKOOP);, THE PRESIDENT, BANKERS ASSOCIATION OF THE
PHILIPPINES (BAP); THE CHAIR, MICROFINANCE COUNCIL OF THE PHILIPPINES,
INC. (MCPI); THE PRESIDENT, PHILIPPINE CHAMBER OF COMMERCE AND
INDUSTRY (PCCI); THE PRESIDENT, PHILIPPINE COUNCIL FOR AGRICULTURE
AND FISHERIES (PCAFI), BANKERS INSTITUTE OF THE PHILIPINES, INC.
(BAIPHIL), AND A REPRESENTATIVE EACH FROM THE COOPERATIVE SECTOR,
THE FARMERS, AND THE FISHERFOLK SECTOR.

SEC. 16. POWERS, DUTIES AND FUNCTIONS OF THE AFCFPC. —- THE AFCFPC
SHALL HAVE THE FOLLOWING POWERS, DUTIES, AND FUNCTIONS:

a) TO SET TARGETS FOR ANNUAL CONTRIBUTIONS TO THE SPECIAL
FUND TO BE COMMITTED BY THE BANKS IN AN AMOUNT THAT IS SUFFICIENT
TO MEET THE ORGANIZATIONAL AND THE CAPACITY BUILDING
REQUIREMENTS OF THE RURAL COOPERATIVES AND OTHER DULY-
REGISTERED ORGANIZATIONS OF RURAL AGRICULTURAL AND FISHERIES
HOUSEHOLDS OVER A PERIOD OF TEN (10) YEARS;

b) TO IDENTIFY ELIGIBLE GRANT RECIPIENTS OF THE SPECIAL FUND;
c) TO IDENTIFY ELIGIBLE AGRICULTURAL- AND FISHERY- RELATED

CAPACITY BUILDING PROGRAMS THAT MAY BE FINANCED BY THE SPECIAL
FUND; AND


d) TOUNDERTAKE REPORTING, MONITORING, EVALUATION AND AUDIT
REQUIREMENTS OF THE SPECIAL FUND AND ACTIVITIES FINANCED.

ARTICLE V
MISCELLANEOUS PROVISIONS

SEC. 17. SUNSET PROVISIONS. THE PROVISIONS RELATED TO THE
MANDATORY CREDIT QUOTA UNDER ARTICLE II AS WELL AS THE
MANAGEMENT AND ADMINISTRATION OF THE SPECIAL FUND UNDER ARTICLE,
Ill SHALL CEASE TO HAVE EFFECT, TEN (10) YEARS FROM APPROVAL OF THIS
ACT.

SEC. 18. Congressional Oversight Committee on Virtual Banks. — To monitor the
implementation of this Act, there shall be a Congressional Oversight Committee on the
RURAL AGRICULTURAL AND FISHERIES FINANCING ENHANCEMENT SYSTEM
composed of the Chair and four other members of the House Committee on Banks and
Financial Intermediaries, and the Chair and four other members of the Senate Committee on
Banks, Financial Institutions and Currencies. No part of this Act shall be construed as to limit
the oversight powers inherently or actually possessed by the same committees

SEC. 19. Repealing Clause. ~ THE PROVISIONS OF REPUBLIC ACT NO. 10000,
EXECUTIVE ORDER NO. 113 AND ANY OTHER laws, presidential decrees, executive
orders, rules and regulations, or parts thereof inconsistent with the provisions of this Act are
hereby repealed or modified accordingly.

SEC. 20. Separability Clause. — If any part, section or provision of this Act is held
invalid or unconstitutional, other provisions not affected thereby shall remain in force and
effect.

SEC. 21. Transitory Provision. - THE BSP SHALL PROMULGATE SUCH RULES
AND REGULATIONS AS MAY BE NECESSARY TO IMPLEMENT ARTICLES I AND II
OF THIS ACT WITHIN NINETY (90) DAYS AFTER THE APPROVAL OF THIS ACT.
PRIOR TO THE EFFECTIVITY OF THE IMPLEMENTING RULES AND REGULATIONS
OF ARTICLES | AND II OF THIS ACT, THE PROVISIONS OF REPUBLIC ACT NO.
10000 SHALL REMAIN IN FORCE.

MEANWHILE, THE AFCPC SHALL PROMULGATE SUCH RULES AND
REGULATIONS AS MAY BE NECESSARY TO IMPLEMENT ARTICLES III AND IV OF
THIS ACT WITHIN NINETY (90) DAYS AFTER APPROVAL OF THIS ACT.

SEC. 22. Effectivity. — 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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