Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

House Bill No.OL81.

INTRODUCED BY REPRESENTATIVE ARTHUR C. YAP

EXPLANATORY NOTE

Republic Act No. 10000, otherwise known as the ‘Agri-Agra Reform
Credit Act of 2009, which repealed Presidential Decree No. 717, aims to
increase credit to the agriculture and agrarian reform sectors. The law orders
banks to set aside at least 25% of their total loanable funds for agriculture
and agrarian reform lending, of which 10% should go to agrarian reform
beneficiaries.

Under the said law, banks have alternative modes to comply with the
25% requirement aside from the extension of loans and purchase of eligible
loans from other banks. These alternatives include paid subscription of
shares of stock in accredited rural financial institutions and investments
in the special deposit accounts of accredited rural financial institutions.
Banks that fail to comply with the requirements of RA 10000 will have to
pay a penalty equivalent to 0.5% of their non-compliance or under-
compliance, which will be computed on a quarterly basis.

Records by the BangkoSentral ng Pilipinas (BSP) show that universal
and commercial banks have a higher alternative compliance than direct
lending. The Bankers Association of the Philippines (BAP) explained its
members usually gravitate towards alternative modes of compliance with
less risk exposures and are seeking for alternative ways to comply with the
requirements of the law. The BAP is of the position that the law’s intent
should be broadened to ‘countryside lending’.

This bill seeks to provide for further alternative modes of compliance
with the requirement of RA 10000. It allows the direct lending to rural and
cooperative banks and to farmers to strengthen countryside lending. The
loans should be directed to borrowers that will use the money for initiatives
that will also benefit the agriculture sector.

Furthermore, the proposed measure seeks to allow direct investments
to accredited rural financial institutions (RFIs) as another alternative form of

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compliance. RFIs act as direct conduits to the agriculture sector and
agrarian reform beneficiaries by channeling the funds specifically allotted by
other banks for the program. This gives RFls a critical role in the funding
chain.

In view of the foregoing, the immediate passage of this measure is

earnestly sought.

ARTHUR C. YAP
Representative


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

House Bill No. 5181

INTRODUCED BY REPRESENTATIVE ARTHUR C. YAP

AN ACT
PROVIDING FOR FURTHER OPTIONS FOR
COMPLIANCE WITH SECTION 7 OF REPUBLIC ACT
NO. 10000, OTHERWISE KNOWN AS THE ‘AGRI-
AGRA REFORM CREDIT ACT OF 2009”

Be it enacted by the Senate and House of Representatives of the Philippines
inCongress assembled.

SECTION 1. Additional Mode of Compliance for Agri-Agra
Loans. —Section 7 of Republic Act No. 10000, otherwise known as the
“Agri-Agra Reform Credit Act of 2009’, is hereby amended to read as
follows:

Section. 7. Modes of Compliance. - The BSP, the DA and the

DAR, in consultation with concerned agencies and sectors,

shall promulgate such rules and regulations as may be

necessary to implement the provisions of this Act within ninety

(90) days after the approval of this Act. Such rules and

regulations shall take effect fifteen (15) days after its

publication in a newspaper of general circulation in the

Philippines. Subject to such rules and regulations, banking

institutions may be allowed to:


(a) xxx
XXX
(G) PROVIDE DIRECT LOANS TO RURAL AND
COOPERATIVE BANKS AND TO FARMERS;
AND,

(H) INVEST DIRECTLY TO ACCREDITED RURAL
FINANCIAL INSTITUTIONS ACCREDITED BY
THE BSP AS SUCH UNDER EXISTING RULES
AND REGULATIONS.

SECTION 2. Separability Clause. —\f any provision of this Act or
the application of such provision to any person or circumstance is declared
unconstitutional, the remainder of this Act or the application of such
provision to other persons or circumstances shall not be affected by such
declaration.

SECTION 3. Repealing Clause. All acts, charters, executive
orders, administrative orders, rules and regulations, or parts thereof, in
conflict with this Act are hereby repealed or modified accordingly.

SECTION 4. Effectivity. - This Act shall effect fifteen (15) days
after its publication in the Official Gazette or in at least two (2) newspapers
of general circulation.

APPROVED,