HOUSE OF REP
Republic of the Philippines SENT ATIEE:

HOUSE OF REPRESENTATIVES RECEIVED
Quezon City pare! 9 JUL 2018

wwe: Lae PA
SEVENTEENTH CONGRESS °Y
RECISTRATION UNIT

First Regular Session | gy) c any INDEX SERVICE

Bate
House Bill No. 1719

Introduced by HON. ROZZANO RUFINO B. BIAZON

EXPLANATORY NOTE

The biggest challenge the current administration faces right now is how to ensure that
society's poorest sectors reap the benefits of development. Almost half of the country’s
population lives below the poverty line. Of these, nearly three quarters live in rural areas.

These figures tell us that if we are to win the battle against poverty, we must wage it
in the countryside. The micro-credit programs done in Bangladesh, Brazil and a few other
countries have proven its worth as a vehicle for economic empowerment for those who least
expect it,

Micro-entrepreneurs thrive in the rural areas - sari-sari store operators, pedicab and
tricycle drivers, candy vendors and our daily newspaper suppliers, to name a few. Despite

limited business scopes, micro-enterprises have a significant and positive effect on the
economy. That's because, first, they maximize resources abundant in their community.
Second, they bank on locally available human resources,

‘The most appropriate vehicle for countryside-led growth, micro- credit finance should
be one of the functions of the Land Bank of the Philippines which was created under
Republic Act No. 3844 (RA 3844), originally for the purpose of financing the purchase of
agricultural estates offered for sale, and to resell the lands to farmer beneficiaries under a
long-term amortization scheme. Presidential Decree No. 251 subsequently gave Land Bank
commercial banking powers to cross-subsidize agrarian land transfer and loans to small
farmers and fisher folk. As a government universal bank, Land Bank’s vision is to be a
dominant financial institution in the countryside leading the nation to economic prosperity

This measure hopes to reinforce Land Bank's development mission by amending RA
3844 to institutionalize micro-credit financing as part of the Bank’s key operations. It
authorizes the Bank to grant collateral-free loans ranging from Two Thousand Pesos



(P2,000.00) to Twenty Thousand Pesos (P20,000.00) to private individuals or informal
groups of persons to finance self-help ventures and small-scale businesses or crafis.

To ensure the effective enforcement of this Act, Land Bank would be required to
allocate 25% of its loan portfolio to micro-lending and to submit an annual report to Congress
on its micro-lending operations to enable the government to monitor the success of mi
financing as a poverty-reduction scheme. To instil fiscal discipline

If warranted by these amendments, the penalty imposed for violation of the provisions
of this Act is increased to Fifty Thousand Pesos (P50,000.00) from the current Ten Thousand
Pesos (P10,000.00).

Financial services for the poor have proved to be a powerful instrument for poverty
reduction that enables the poor to build assets, increase incomes, and reduce their
vulnerability to economic stress. However, the challenge of providing financial services to
them remains,

In view of the foregoing, the approval of this bill is earnestly requested.

wd (0 RUF§NO B. BIAZON

Representative
‘ict, Muntinlupa City



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City
SEVENTEENTH CONGRESS

First Regular Session

House Bill No. 17.49)

Introduced by HON. ROZZANO RUFINO B. BIAZON

AN ACT
TO INSTITUTIONALIZE MICRO-CREDIT FINANCING, AMENDING FOR THIS
PURPOSE REPUBLIC ACT NO. 3844, AS AMENDED, OTHERWISE KNOWN AS.
“THE CODE OF AGRARIAN REFORM IN THE PHILIPPINES,”
APPROPRIATING FUNDS THEREFOR, AND FOR OTHER PURPOSES

Be it enacted by thi
Philippines in Congress ass

nate and the House of Representatives of the Republic of the
mbled:

SECTION 1. Paragraph 6, Section 75 of Republic Act No. 3844, as amended, is
hereby further amended to read as follows:

“6. To grant loans to farmers’ cooperatives/associations to facilitate
production, MARKETING AND DELIVERY AND/OR DISTRIBUTION of crops
and acquisition of essential EQUIPMENT, MACHINERY, TOOLS AND
commodities AS WELL AS TO EXTEND UNCOLLATERALIZED LOANS OF
NOT LESS THAN TWO THOUSAND PESOS (P2,000.00) AND NOT MORE
THAN TWENTY THOUSAND PESOS (P20,000.00) TO PRIVATE
INDIVIDUALS OR GROUPS OR AGGRUPATIONS OF PERSONS TO
FINANCE MICRO-VENTURES, LIVELIHOOD PROJECTS, SMALL-SCALE
CRAFTS, CAPITAL FOR RETAIL OR OTHER SMALL-SCALE
BUSINESSES OR OCCUPATIONS PROVIDED THAT SUCH PRIVATE
GROUPS OR AGGRUPATIONS ARE REGISTERED WITH THE
DEPARTMENT OF FINANCE.”

Sec. 2. Sec. 80 of the same Act, as amended, is hereby further amended to read as
follows:

“Sec. 80. Modes of Payment. ~ The Bank shall finance the acquisition of farm
lots as WELL AS MICRO-PROJECTS, VENTURES AND UNDERTAKINGS


PROVIDED IN PAR. 6 OF SECTION 75 OF THIS ACT under any of the
following modes of settlement:
XXX”

Sec. 3. Sec. 81 of the same Act is hereby further amended, by adding two new
paragraphs to be known as par. 81-A and 81-B, to read as follows:

“SEC. 81-A. - TO FINANCE THE  MICRO-LENDING
UNDERTAKINGS AND TO SUPPORT THE MICRO-FINANCE
OPERATIONS OF THE BANK AS ENVISIONED IN THIS ACT,
INCLUDING THE EMPLOYMENT, DEPLOYMENT AND TRAINING OF
ADDITIONAL PERSONNEL AS WELL AS THE CREATION OF NEW
OFFICERS OR BRANCHES, THERE IS HEREBY APPROPRIATED THE
SUM OF FIFTY MILLION PESOS (P50,000,000.00) OUT OF THE FUNDS OF
THE NATIONAL TREASURY NOT OTHERWISE APPROPRIATED,
WHICH SUM SHALL FORM PART OF THE CAPITALIZATION OF THE
BANK.”

“SEC. 81-B. - THE BANK SHALL ALLOCATE 25% OF ITS LOAN
PORTFOLIO TO FINANCE MICRO-LOANS AUTHORIZED UNDER THIS
ACT.”

Se

4. Sec. 86-A of the same Act is hereby further amended to read as follows:

“Sec. 86-A. Powers and Responsibilities of the Board. - The Board of
Directors shall have, among others, the following specific powers and responsibiliti

1. Formulate policies, rules and regulations for the effective operation of the Bank,
AS WELL AS TO CARRY OUT THE PROVISIONS OF THIS ACT;

2. xxx

3. Establish such branches, [and] agencies OR OFFICES as may be deemed
necessary and convenient FOR THE EFFECTIVE IMPLEMENTATION 0}
ITS MANDATE FOR THE AGRI-LENDING AND MICRO-LEND!
FINANC

4. xxx
5. xXx
6. XXX

7. TO PROVIDE FOR THE RECRUITMENT OF ADDITIONAL OR FIELD
PERSONNEL TO CONDUCT INFORMATION AND TRAINING
PROGRAMS ON MICRO-FINANCING, PROPER ENFORCEMENT OF
PROGRAM POLICIES AND PROCEDURES, AND THE NECESSARY
LENDING TECHNOLOGY TERMS OR MECHANISM FOR MICRO-
LENDING AS PROVIDED IN THIS ACT; AND

2


8. TO SUBMIT TO CONGRESS AN ANNUAL REPORT OF ITS MICRO-
LENDING OPERATIONS WITH EMPHASIS ON THE NUMBER OF
BENEFICIARIES, REPAYMENT RATES, REACH OUT ACTIVITIES
AND RELEVANT MATTERS.”

Sec. 5. Sec. 100 of the same Act is hereby amended to read as follows:

“Sec. 100. Penalty for Violation of the Provisions of this Chapter. — Any
director, officer, employee or agent of the Bank who violates or permits the violation
of any of the provisions of this Chapter or any person aiding or abetting the violation
of any of the provisions of this Chapter, shall be punished by a fine of not to exceed
{ten] FIFTY thousand pesos (PS0,000.00) or by imprisonment of not more than five
years, or both, such fine and imprisonment at the discretion of the Court.”

Sec. 6. Implementing Rules. ~ The Department of Finance shall, in consultation with
the Land Bank of the Philippines and the Department of Trade and Industry, Department of
Social Welfare and Development, Department of Science and Technology, Department of
Labor and Employment, Department of Agriculture and the Department of Agrarian Reform,
promulgate the necessary rules and regulations for the immediate and effective
implementation of this Act within thirty (30) days from the effectivity of this Act.

Sec 7. Repealing Clause. — All laws, decrees, executive issuances, rules and
regulations inconsistent with this Act are hereby repealed or modified accordingly.
Sec. 8. Separability Clause. ~The provisions of this Act are hereby declared to

be separable, and in the event one or more of such provisions are held unconstitutional,
the validity of the other provisions shall not be affected thereby.

Sec. 9. Effectivity. ~ This Act shall take effect fifteen (15) days after its publication in
the Official Gazette or in at least two (2) newspapers of general circulation whichever comes
earlier,

Approved,