SUNDAY, 11 SEPTEMBER 2011 19:20
RECENT adjustments on loans the banks extend to the agriculture and the
agrarian sectors have made thrift banks pine for the old days when there
were more eligible avenues for compliance than those at present.
Chamber of Thrift Banks (CTB) president Patrick Cheng, also the chief
executive at HSBC Savings Bank, said earlier regulations provided CTB
member banks plenty of avenues for compliance to so-called agri-agra
rules, which prescribes stiff penalties for lenders who fail to allocate
a given portion of their loan portfolios to farmer borrowers and
agrarian- reform beneficiaries.
The 25-percent agri-agra loan rule compels the banks to set aside at
least 15 percent of loan portfolio for borrowers in the agriculture
sector and the balance of 10 percent for agrarian-reform beneficiaries
and their families.
"The old agri-agra law provided alternative modes of compliance. Now
there are less of those. Obviously, that is a big concern for our member
banks," Cheng said.
This pertained to more recent refinements in agri-agra lending rules
that effectively diminished the number of avenues by which the banks
comply on pain with the mandate on punitive sanctions.
Cheng said representations have been made before the influential Bankers
Association of the Philippines (BAP), the umbrella organization to which
the foreign lender HSBC, HSBC Savings Bank's parents, belongs.
"The idea of agri-agra lending is obviously good and important.
Agriculture is an important sector of our economy. But we can [still]
expand the definition of agri-agra lending because some of the
definition is narrow," Cheng said.
He said they have sought BAP assistance in drafting a wider, more
liberal definition of lending to the mandated sectors.
"We are in discussion with the BSP [Bangko Sentral ng Pilipinas] to help
us draft something more inclined to countryside lending, something
broader that will include [lending to] schools, tourism entities and
others. This will be a broader initiative that will be helpful to the
banking sector," he said.
Cheng said the broader goal was to leverage more the banks'
capabilities: "We want a wider coverage [of eligible agri-agra lending]
instead of a narrow one."
He also said that while focusing resources on the agri-agra sectors is
an important mandate, growth in the favored sectors was not the only
measure of economic development.
"There are many ways by which the country can grow and benefit from. The
Department of Finance has cited investment in tourism ventures and
others like water services and similar infrastructures," Cheng said. --
Jun Vallecera
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