Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

17" Congress
First Regular Session

House Bill No, 4853

Introduced by REP. MICHAEL L. ROMERO.

EXPLANATORY NOTE

It is a declared policy of the state under Republic Act No. 10000,
otherwise known as the Agri-Agra Reform Credit Act of 2009"to promote equal
access fo opportunities under an environment of sustained growth and
expanding productivity as the key fo raising the qualily 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 agriculiural sector”

Section 6 of the said law provides that “all banking institutions, whether
government or private, shail set aside at least twenty-five percent (25%) of their
total loanable funds 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”. Unfortunately,
records from the Bangko Sentral ng Pilipinas (BSP) show that the combined
loanable allocations of all banking institutions for agriculture sector and agrarian
reform beneficiaries since the effectivity of the act is way below the mandated
threshold,

The noble objective of the law is thwarted by the unwillingness of most
banking institutions to assume the perceived risk to otherwise qualified borrowers
and instead opted to pay the penalties as provided for in section 10 of the said
act. While we recognize the inherent right of financial institutions to implement
what they consider as sound fiscal/lending policy, they have equal duties to


obey, in utmost good faith, the mandates of the law rather than deciding to
pay the penalties for non-compliance thereof.

The qualified credit beneficiaries from the agricultural and fisheries sector
have not been able to fully use the credit services provided by the banks and
other Accredited Rural Financial Institutions as mandated by law, because such
banks and other lending institutions have imposed sirict requirements and high
standards on the borrowers’ ability to pay off their loans, thus making it difficult
for them to obtain the necessary credit. In so doing, not only has the twenty-five
percent (25%) of the supposed to be total loanable funds for agriculture and
fisheries credit in general have not been made attainable but the net effect is
that it has severely hampered the agricultural and fisheries development in the
rural sector,

This proposed act is not aimed at penalizing the banking institutions but to
encourage them to dig deep into their financial ingenuity to come up with

alternative or special credit programs for those usually coming from the
marginal sectors.

Approval of this bill is therefore sought. :

MICHAEL [/ ROMERO Ph.D


Repubiic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

17% Congress
First Regular Session

. 4353

House Bill No.

Introduced by REP. MICHAEL L. ROMERO

AN ACT

INCREASING THE ALLOTMENT OF THE REGULAR LOAN PORTFOLIO OF
THE LAND BANK OF THE PHILIPPINES (LBP) FOR FINANCING
AGRICULTURAL PROJECTS IN PURSUANT WITH THE PROVISIONS OF R.A.
No. 10000, OTHERWISE KNOWN AS “THE AGRI-AGRA REFORM CREDIT
ACT OF 2009”,AND FOR OTHER PUSPOSES.

Be i! enacted by the Senate and the House of Representatives of the Philippines
In Congress assembled:

SECTION 1. DECLARATION OF POLICY:

It is hereby declared that the Land Bank of the Philippines (LBP) shall allocate ten
percent (10%) of its regular loan portfolio (net loans to the Bangko Sentral ng
Pilipinas, interbank loans and availments from domestic bills purchase line), for
socialized credit to qualified small farmers, fisherfolk and agrarian reform
beneficiaries (ARBs). This facility shall solely finance agricultural projects pursuant
to the provisions of Section 4 of Republic Act No. 10000, otherwise known as “
The Agri-Agra Reform Credit Act of 2009 “.


SECTION 2, AMENDMENTS — Any amendments to the administrative
sanctions and their penalties shall be proposed by and ratified by and the same
shall take effect upon approval by the Monetary Board of the Bangko Sentral ng
Pilipinas.

SECTION 3. SEPARABILITY CLAUSE - If any provision or section of this
Act or the application thereof to any person or circumstances is held invalid, the
other provisions or sections of this Act shall remain valid, and the application of
such remaining provisions or sections to the other persons or circumstances, shall
not be affected thereby.

SECTION 4. REPEALING CLAUSE - All provisions of Republic Act
No.10000 and any other provisions inconsistent with the provision of this Act are

hereby amended accordingly.

SECTION 5. EFFECTIVITY CLAUSE — This Act shall take effect fifteen (15)
days from the date of its publication in the Official Gazette or in at least two (2)

newspapers of general circulation.

Approved.