DUMAGUETE CITY – President Duterte is urged to push the banking sector to implement that long-ignored law for all banks, to allow 25% of their loan portfolio to be loaned to the agriculture sector so that this country —which is mainly agricultural — can now finally be sufficient to food to feed the ever growing millions of Filipinos.
Look at how the NFA National Food Authority even is footballed from one department to another. Just last week, NFA was transferred to be under the Dept of Agriculture. All because the agricultural sector needs financial support to be able to be self sufficient.
The truth of the matter is that banks want to suck all our deposits big and small so that they can lend it to the rich big-time borrowers even using our small hard earned savings which only earn a meager one fourth of one percent of .25% of our principal deposits.
The banking sector relegates agriculture borrowings to rural banks which are mostly family-owned and would also make it hard for other borrowers other than their family banking needs. That is why agriculture is a failure in this country because of lack of financial support from the banking sector. It is high time that Pres. Duterte being the mayor of the Philippines, s should push banks now to implement this law which requires banks to lend 25% of their liquidity to agriculture.
AND HERE IS A BETTER NEWS: our columnist Bingo Dejaresco wrote earlier that the Financial Inclusion Bill should now be passed into law. Bingo writes:
NOW ON SECOND SENATE READING is SB No 1450 known as The Financial Inclusion Act / Personal Property Act which had already passed third reading in the Lower House under HB No 6907.
One of the three C’s missing in granting credit to borrowers in the Philippines is the issue of “Collateral”. It is not its absence but the lack of bank appreciation of certain types of collateral given the existing legal framework and ambiguity with respect to their comfortable valuation to suit the risk appetite of lenders.
Banks currently would prefer land and other “hard assets” as collateral. Thus, many MSME’s are forced to go to the informal “5-6” usurers -thus impeding their growth. Statistics also bear out that the Philippines is one of the countries with the highest ratio of businesses borrowing from relatives and friends- sometimes destroying precious relationships in the process of collection.
On the other hand, the Agri-Agra Law which mandates banks to allot 25 percent of their total loan portfolio to agriculture is observed more on the breach with banks opting to pay billions in penalties to avoid compliance. Is this bill one of the ways out of this fix?
The bill essentially allows the acceptability of “movable assets and personal properties” as collateral. Key to this is the establishment of the common electronic registry through the Land Registration Authority of all such collateral allowing for more transparency, less legal hitches in foreclosure and disposition of assets and does away with the expensive and tedious process of booking such collateral, otherwise.
Effectively, the bill looks at the following collateral as consideration for lending: inventories, account receivables, future receivables, crops, machinery and equipment, ,warehouse receipts, intellectual property and other personal property.
The process precludes the same due diligence on the borrower per se and the possible loan value of such collateral which is always addressed by the sound judgment of astute bankers. But in the end – the ability of the banks to change their mindset and accept the spirit of the bill will enable them to diversify earning assets ( into healthy MSMEs) and their risks (geographically and industry wise) as well as broaden their collateral-mix.
Among those fashioned to help financial inclusion, this Bill of Financial Inclusion appears to be the one having immediate and robust impact on the economy in general and the MSME’s practitioners in particular. We urge the Senate to prioritize in making the bill into law.