LBP Agri Loans Reach P285.5B
MANILA, Philippines - State-owned Land Bank of the Philippines (LBP) continued to adopt measures to mitigate risks of lending to small farmers and fisherfolk as loan disbursements to this sector reached P285.5 billion from 1991 to 2010.
Landbank president and CEO Gilda E. Pico said the bank has strengthened the implementation of mitigating controls for lending to small farmers and fisherfolk who in most cases do not have hard collaterals to offer.
One measure is the enhancement of the Bank’s Cooperative Accreditation Criteria and the Countryside Financial Institution (CFI) Risk Assets Acceptance Criteria which are used in assessing the cooperative and CFI’s eligibility to access the Bank’s credit facilities and other services. The asset acceptance criteria serve as Landbank’s ultimate measure of risk acceptance for all its credit programs.
Landbank has also adopted the use of the Enterprise-based Approach in extending credit and other services. And as part of its credit enhancements, Landbank uses the PCIC Insurance Coverage, the Guarantee coverage of the Agricultural Guarantee Fund Pool (AGFP), the Credit Surety Fund (CSF) and other guarantee funds.
Furthermore, Landbank encourages purchase order or confirmed market tie-up between producers or cooperatives and reliable buyers or processors through the signing of the Production Technical and Marketing Agreements (PTMA). This tie-up is done through the signing of Production Technical and Marketing Agreement (PTMA) of both parties specifying the roles of the partners and embodies the collection mechanism of cooperative’s loans extended by Landbank.
In 2010, Landbank reported written-off accounts amounting to P471.19 million for loan releases to cooperatives and CFIs.
Pico explained that the said written-off accounts were not incurred in 2010 alone but over a period of 19 years, representing 0.17 percent of the Bank’s total loan disbursements during the period.
“We undertake several remedial measures before proposing loans for write off. We only propose a loan for write off when all efforts have been exerted to collect or recover payment from the borrower but to no avail,” Pico said.
The bank president underscored that Landbank remains committed to its support to the farmers and fisherfolk sector, while striking a balance in strengthening its viability as a premier government financial institution.
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