Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Constitution Hills, Quezon City 
NINETEENTHCONGRESS 
First Regular Session 
House Bill No._____ 
___________________________________________________________ 
Introduced by: REPRESENTATIVE EDWIN L. OLIVAREZ 
AN ACT MANDATING BANKING INSTITUTIONS TO 
STRENGTHEN THE FINANCING SYSTEM FOR 
AGRICULTURAL, FISHERIES, AND RURAL DEVELOPMENT 
IN THE PHILIPPINES 
EXPLANATORY NOTE 
The Constitution of the Philippines provides that the Congress shall 
give highest priority to the enactment of measure that protect and enhance 
the right of all the people to human dignity, reduce social, economic, and 
political inequalities, and remove cultural inequities by equitably diffusing 
wealth and political power for the common good, Likewise, the 
Constitution of the Philippines also provides that the State shall promote 
comprehensive rural development and agrarian reform. These two (2) 
constitutional provisions are imperative in creating measures and policies 
that will contribute in eradication of poverty in the Philippines. 
The agricultural sector of the Philippines plays a huge role in our 
country; some might even say that it is the most essential industry in our 
country. However, being part of the most essential industry in the country 
does not mean that the people there enjoy a decent standard of living. Rural 
communities today are still faced with challenges which even include 
access to basic services. 
A dynamic agricultural sector is an important foundation of rural 
development. This Bill is inclined in answering the needs of the agricultural 
sector through developing the roles of banking institutions as stakeholders 
January 4, 2023
6:15 pm
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In rural development, the creation of an Agriculture, Fisheries, and 
Rural Financing System is the forefront of this Bill. The financing system 
shall consist of loans, investments, and grants that will enhance the 
productivity and income of agricultural sector which shall thereby lead to 
a sustainable development of rural communities. 
In view of the foregoing, the passage of this Bill is earnestly sought. 
. 
EDWIN L. OLIVAREZ 


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Constitution Hills, Quezon City 
NINETEENTH CONGRESS 
First Regular Session 
House Bill No._____ 
___________________________________________________________ 
Introduced by: REPRESENTATIVE EDWIN L. OLIVAREZ 
AN ACT MANDATING BANKING INSTITUTIONS TO 
STRENGTEN THE FINANCING SYSTEM FOR 
AGRICULTURAL, FISHERIES AND RURAL DEVELOPMENT 
IN THE PHILIPPINES 
Be it enacted in the Senate and the House of Representative of the 
Republic of the Philippines in Congress assembled: 
Section 1. Short Title. – This Act shall be known as the “The Rural 
Agricultural and Fisheries Financing Enhancement Act of 2022”. 
         Section 2. Declaration of Policy. - It is hereby declared the policy of 
the State to promote comprehensive rural development and agrarian reform 
in order to accelerate economic development. Towards this end, the State 
shall create measures in order to provide a more equitable distribution of 
opportunities, income, and wealth, a sustained increase in the amount of 
goods and services produced by the nation for the benefit of the people and 
an expanding productivity in order to raise the quality of life for all, 
especially the underprivileged. 
 Section 3. Definition of Term. – 
(a) Agri-Business shall refer to agriculture and fishery-related activities
conducted by farmers, fisherfolk processors, distributors, and
consumers which produce, 
process, transport, market, and
distribute agricultural and fishery products.
(b) Agricultural or Fisheries Household shall refer to a household who has at
least one (1) member who is a farmer, fisherman, agrarian reform
beneficiary, farmworker, owner-cultivator, compact farmer, and the like;
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(c) Farmer refers to a person who works for value as a laborer in an 
agricultural enterprise regardless of whether their compensation is 
paid on a daily, weekly, monthly, or “pakyaw” basis; 
(d) Farmer’s and Fisherfolk’s Organizations shall refer to farmers’ 
and fisherfolks’ associations, cooperatives, or corporations which 
are composed of small agricultural producers, farmers, farmworkers, 
agrarian reform beneficiaries, and fisherfolk who voluntarily join 
together to form business enterprises or non-business organizations 
which they themselves own and control; 
(e) Fisherfolk shall refer to persons who are engaged in the catching, 
culturing, and/or processing of fishery and/or aquatic resources. 
 
      SECTION   4.   Agriculture,   Fisheries   and   Rural   Financing 
System. -  An Agriculture, Fisheries and Rural Financing System is hereby 
established for the purpose of improving the income and productivity, and 
the quality of life of the rural beneficiaries. 
 
Agriculture,  fisheries,  and rural financing,  for purposes of this Act, 
shall refer to loans, investments, and grants to finance activities that focus 
on improving productivity and increasing the income of agricultural and 
fisheries households. In effect, agricultural sector productivity and 
competitiveness shall be promoted as well as sustainable development of 
rural communities. These activities shall include, but shall not be limited 
to, off-farm activities, agricultural modernization, agri-tourism, green 
finance projects, acquisition of lands authorized under the Agrarian 
Reform Code of the 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, projects that 
promote the livelihood of the rural community beneficiaries and all other 
analogous activities as may be determined by the Agricultural and Fisheries 
Finance and Capacity-Building Council (AFFCC). 
         SECTION 5. Rural Community Beneficiaries. - The afore-
mentioned rural community beneficiaries shall refer to those actually 
named as such, or to cooperatives, associations, MSMEs, or organizations 
of such beneficiaries without regard to the 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. 
 


 
SECTION 6. Credit Allocation. - All banking institutions, both 
government and non-government, with the exceptions of newly 
established banks for a period of five (5) years from the date of 
commencement of bank operations shall allocate credit or a minimum 
mandatory agricultural and fisheries financing requirement of at least twenty- 
five (25%) of their total loanable funds. 
 
The total loanable funds generated by a banking institution shall be 
defined by the Bangko Sentral ng Pilipinas. 
 
         SECTION 7. Credit Allocation Compliance. - Banks may comply 
with the mandatory credit allocation requirement by lending to rural 
community beneficiaries to finance agricultural and fishery-related 
activities identified under the Agriculture & Fisheries Modernization Act 
of 1997, agricultural modernization, agri-tourism, green finance projects, 
marketing, processing,  distribution  and storage  of agricultural  and fishery 
commodities, livelihood  projects,   skills   enhancement   or  capacity-
building programs. 
 
 
The following shall also be accepted as compliance of the credit 
allocation requirement as provided for by this Act: 
 
(a) Invest in debt securities including debt securities 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 
the activities mentioned in Section 4 of this Act. Provided 
further, that the proceeds from debt securities issued by the 
DBP and LBP shall be separately accounted for and shall 
not be considered for purposes of computing loanable funds 
under Section 6 hereof; 
 
b) Open deposit accounts with rural financial institutions.
 Provided, that said 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; 
 
(c) Directly invest in shares of stock, 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) 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; 
(e) Lend for the construction and upgrading of rural 
infrastructure that will  promote the agriculture fisheries and 
agrarian reform sector; 
 
(f) Lend to agricultural business enterprises that maintain 
agricultural commodity supply chain arrangements directly 
with rural community beneficiaries; 
 
(g) Undertaking agricultural value chain financing that shall 
be beneficial to rural communities. 
 
 
Section 8. Review of Compliance Modes. – The modes enumerated 
in the preceding section shall be subject to review by the AFFCC after its 
implementation and the same shall determine whether said modes are 
adequate to support the financing requirements of rural communities. It 
shall recommend to Congress the same for appropriate action. 
 
Section 9. Annual Reports. – The BSP shall report annually to 
Congress the compliance with the mandatory agricultural and fisheries 
financing requirements as provided for by this Act. 
 
Section 10. Penalty Clause. – The BSP shall impose administrative 
sanctions and other penalties on the lending institutions for violation for 
any of the provisions of this Act. Penalties on noncompliance or under 
compliance with the mandatory agricultural and fisheries financing 
requirements shall be computed at one-half of one percent (0.5%) of 
noncompliance or under compliance or at rates prescribed by the BSP 
Monetary Board. Ten percent (10%) of the penalties collected shall remain 
with the BSP in order to shoulder administrative expenses for its regulatory 
functions in connection to this Act. 
 
 
Section 11. Agribusiness Management Capacity and institution-
Building Fund. – There shall be created a special fund which shall be the 
Agribusiness Management Capacity and Institution-Building Fund which 
shall be used to finance agricultural and fishery-related activities including 
organizational capacity and related to agriculture, fisheries and rural 
undertakings. In relation to this, banking institution may choose to provide 
contributions to said fund in order to comply with the mandatory credit 
allocation set forth in this Act. 
 
 
The initial amount of the agribusiness Management Capacity and 
Institution-Building Fund shall be at least ten (10) billion pesos which shall 
include penalties due from banks on their noncompliance or under 
compliance of the mandatory Agri-Agra credit requirements under 
Republic Act No. 10000, collected after the effectivity of this Act. 
 
 
In case of shortfall, the banks shall contribute a maximum amount 
of two (2) billion pesos, which shall be chargeable against future penalties 


under this Act but shall not be considered as a mode of compliance as set 
forth hereof. 
 
 
Section 12. Application for Funding. -  All banks, duly-registered 
training and capacity-building organizations. Cooperatives and other 
duly0registred organizations may apply with the AFFCC for funding their 
capacity and institution-building programs and activities. 
 
 
Section 13. Agricultural and Fisheries Finance and Capacity-
Building Council (AFCC).- There shall be created an agricultural and 
Fisheries Finance and Capacity Building Council which shall be composed 
of designated representatives from the following agencies: 
 
(a) The Department of Agriculture, as Chairman; 
(b) The Banko Sentral ng Pilipinas; 
(c) The Department of Agrarian Reform; 
(d) The Department of Trade and Industry; 
(e) The Cooperative Development Authority; 
(f) The Land Bank of the Philippines; 
(g) The Development Bank of the Philippines; 
(h) Nine (9) representatives from the private sector one of whom 
shall be appointed as Vice Chairperson. 
 
The private sector representative shall include representatives from: 
(a) The Rural Bankers Associations of the Philippines; 
(b) The Bankers Association of the Philippines; 
(c) The Chamber of Thrift Banks; 
(d) The Cooperatives Banks Federation of the Philippines; 
(e) The Microfinance Council of the Philippines; 
(f) The Philippine Chamber of Commerce and Industry; and  
(g) A representative from the cooperative sector, the farmers, and 
fisherfolk sector, repectively. 
 
Section 14. Functions and Duties of the AFFCC. – The AFFCC 
shall have the following functions and duties: 
 
(a) Establish a target amount for the Special Fund in order 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) Determine eligible recipients of the Special Fund; 
(c) Determine activities and programs that shall be finances through 
the special Fund; 
(d) Ensure effective implementation and programs financed by the 
Special Fund and employ resources from banking industry which 
are capable of providing project coordination and fund 
management services; 
(e) Ensure compliance with the reporting, monitoring, evaluation 


and audit requirements of the Special Fund and activities 
financed 
 
Section 15. Oversight Committee. – For purposes of monitoring the 
implementation of the provisions of this Act, an oversight committee shall 
be created which shall be composed of the following: 
 
(a) The Chairperson of the Committee on Banks and Financial 
Intermediaries of the House of Representatives; 
(b) The Chairperson of the Committee on Banks, Financial 
Institutions and currencies of the Senate. 
(c) A representative from the Office of the President; and 
(d) A representative from Commission on Audit. 
 
Section 16. Sunset Provision. – The provision related to the 
mandatory credit allocation under Section 5 of this Act shall cease to be 
effective ten (10) years from effectivity of this Act. 
 
Section 17. Implementing Rules and Regulation. – The appropriate 
government agency shall establish the implementing Rules and 
Regulations of this Act within ninety (90) days after the passage hereof. 
 
 
Section 18. Separability Clause. – If any provision of this Act is 
declared invalid or unconstitutional, the other provisions not affected 
thereby shall remain valid and subsisting. 
 
 
Section 19. Repealing Clause. – All Acts, executive orders, 
memorandum circular/guidelines and other issuances or parts thereof, 
which are inconsistent with this Act, are hereby repealed or modified 
accordingly. 
 
 
Section 20. Effectivity. – This Act shall take effect fifteen (15) days 
after its publication in the Official Gazette or in two (2) newspapers of 
general circulation 
 
Approved.