Published : Thursday, December 01, 2011 00:00 Article Views : 45
The Rural Bankers Association of the Philippines said it will continue
to be at the forefront of agricultural growth by infusing the needed
capital for small farmers and rural-based small businesses.
According to its president Ian Eric Pama, the organization will remain a
fixture in providing financial assistance to the agricultural sector,
which has showed surprising resiliency despite numerous bouts with typhoons.
"More than ever, we remain essential in providing and extending
financial assistance to our farmers who have achieved a bumper crop
harvest of corn for the first time in recent history," he said in a
speech during RBAP's 54th Charter Anniversary Symposium held at the
Manila Hotel.
The Department of Agriculture recently reported that the Philippines
will be rice sufficient by 2013. This bullish projection is welcome news
for RBAP.
"[The DA forecast] puts us directly in the frontline of sustaining the
financial ability of our farmers and ancillary industries in helping
them move their businesses and agricultural growth forward and upward,"
Pama said. "We can ably move this on by already providing micro
insurance products for the farmers and small businesses that are
dependent on agricultural production."
During the same event, Bangko Sentral ng Pilipinas Deputy Governor
Nestor Espenilla Jr. said the current roster of players in the rural
banking industry, which he affectionately alluded to as the "next
generation," is growing at an impressive double-digit pace in all key areas.
"Loans are up by more than 20 percent; deposits by more than 14 percent.
Return on equity is nearly 16 percent," he said, referring to industry
figures during the first nine months of the year. "The rural banking
sector is fast evolving and clear indications of the continued
consolidation of the sector are increasingly evident."
At end-September, there were 582 rural banks with 2,009 branches and
offices.
Espenilla noted that over the last 30 years, the total deposit base of
the rural banking system has grown exponentially from just P2 billion to
P115 billion today—a 50-fold improvement.
"The message is clear—strong and well-managed rural banks are thriving
and retain the capacity to expand. They will define the rural banking
industry of the future," he said.
Last year, the BSP issued circulars on housing microfinance, micro-agri
loans and microinsurance. Twenty-one rural banks have micro-agri
products, 24 with housing microfinance and 49 that have indicated their
intention to offer microinsurance products.
"Rural banks have evidently embraced innovation and taken pioneering
efforts in the development and delivery of products," the BSP official
added.
Rural banks are mandated to allocate 25 percent of their total loan
portfolio for the agri-agra sector.
Presidential Decree 717 or the Agri-Agra Law mandates that at least 25
percent of banks' total loanable funds should be made available to the
agriculture sector, 15 percent of which (or 60 percent of the loanable
funds) for agriculture stakeholders and the 10 percent balance (or 40
percent of the loans) for agrarian reform beneficiaries.
However, the law also permits banks to invest in other non-agri ventures
like investments in the housing, education and health sectors as a means
of alternative compliance.
Currently, more than 50 percent of rural banks' total loans are invested
in the agri-agra sector.
In addition, more than 32 percent of rural banks' loan portfolio is
invested in the agriculture sector totaling more than P35 billion. Loans
to the agriculture sectors have been exceeding 30 percent of the total
loan portfolio of rural banks for the past several years.
Under the Barangay Micro Business Enterprises Act of 2002, government
financial institutions that set up special credit windows to fund the
operations of micro businesses would be able to use the loans granted to
BMBEs as alternative compliance to the Agri Agra Law, and Republic Act
6977 or the Magna Carta for Small and Medium Enterprises.
In addition, the BMBE law provides that any loan granted by a private
institution will be counted as twice in terms of compliance with the SME
Act and with regard to the Agri-Agra Law.
The RBAP was created primarily to advance the industry's mandate to be
the catalyst for countryside development as it provides the financial
services to the unserved and underserved markets.
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