Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 717)
The main purpose of Presidential Decree No. 717 is to provide an agrarian reform credit and financing system for agrarian reform beneficiaries through government and private banking institutions.
Agrarian reform beneficiaries include tillers, tenant-farmers, settlers, agricultural lessees, amortizing owners, owner-cultivators, farmers cooperatives, and compact farms.
Agrarian reform credit includes production loans for acquisition of work animals, farm equipment and machinery, seeds, fertilizers, poultry, livestock, feeds; acquisition of lands authorized under the Agrarian Reform Code; construction or acquisition of facilities for production, processing, storage, and marketing; and merchandising of agricultural commodities.
Credit can be extended based on the feasibility of the project, the beneficiary’s paying capacity, estimated production, securities they can provide, and assets acquired from the loan proceeds.
Banking institutions must set aside at least twenty-five percent (25%) of their loanable funds for agricultural credit in general.
At least ten percent (10%) of the loanable funds must be made available for agrarian reform credit to beneficiaries.
Yes, NEDA may increase or decrease the set percentages upon recommendation by the Department of Agrarian Reform and the Central Bank of the Philippines considering the credit needs of agrarian reform beneficiaries.
The Central Bank must promulgate implementing rules and regulations, allow banking institutions to invest funds set aside for agrarian reform credit in eligible government securities, and allow rediscounting of eligible agrarian reform credit papers.
The issuing government entity must be ready to monetize, encash or repurchase such securities whenever funds are needed by the banks for lending to agrarian reform beneficiaries.
Presidential Decree No. 717 took effect immediately upon its signing on May 29, 1975.