The Monetary Board has approved the Circular on the component of the Implementing Rules and Regulations (IRR) of the Agri-Agra Reform Credit Act (Republic Act 10000) that pertains to banks. RA 10000 repeals Presidential Decree 717 and the IRR was jointly crafted by the Department of Agriculture, the Department of Agrarian Reform and the Bangko Sentral ng Pilipinas.
The new Agri-Agra Law retains the mandatory credit allocation in PD 717 where 25% of banks' total loanable funds are to be set aside for agriculture and fisheries in general, of which at least 10% shall be made available for agrarian reform beneficiaries. The calculation of loanable funds is referenced against the start date of 20 April 2010 (the effectivity of RA 10000) and is premised on the idea that only new funds channeled to the agriculture and agrarian reform sectors are considered.
The new law thus rationalizes the modes of compliance. Apart from direct compliance through loans to qualified borrowers, a streamlined list of alternative compliance mechanisms is also provided in the new law. Among the new alternatives are wholesale lending to and/or investments in accredited rural financial institutions (RFIs), investments in bonds that are declared eligible by the Department of Agriculture in consultation with the Department of Agrarian Reform, loans for construction and upgrading of infrastructure that will benefit the agri-agra sector as well as loans to NFA and NFA-registered warehousemen, millers and wholesalers. The Bangko Sentral ng Pilipinas will accredit the bank-RFIs while the Department of Agriculture will accredit the non-bank RFIs such as cooperatives, microfinance NGOs, among others.
Banks are required to submit the revised reportorial templates beginning end-December 2011 and every quarter thereafter. Penalties shall be levied for non/ under compliance with 90% of the fees accruing to the Agricultural Guarantee Fund Pool (AGFP) and the Philippine Crop Insurance Corporation (PCIC).
Circular No. 736
Frequently Asked Questions on BSP Circular No. 736 (Agr-Agra)