Question & AnswerQ&A (DOA MEMORANDUM)
The CBAP aims to support small rice and corn farmers in GPEP priority areas by partnering with Cooperative Banks (CoopBanks) to provide credit for rice, rice seed, corn production, and grains marketing, supplementing CoopBanks' resources to bolster their operations.
The program covers 24 GPEP priority provinces across several regions such as Pangasinan, Ilocos Norte, Isabela, Nueva Ecija, Laguna, Iloilo, Bohol, Leyte, Bukidnon, Davao Norte, South Cotabato, and North Cotabato among others, subject to revision during implementation.
Eligible CoopBanks must operate in GPEP target provinces, be accredited under rediscounting programs of Land Bank or Central Bank, have no arrearages or have an acceptable payment plan, maintain specified liquidity ratios, and have sound internal management.
For production loans, DA/ACPC matches CoopBanks' resources up to a maximum of 70% in the first year, gradually reducing to 50% by the third year and thereafter. For marketing loans, the fund sharing is evenly split at 50:50.
Credit lines to CoopBanks carry an interest rate of Manila Reference Rate (MRR) minus 6% for cooperatives and MRR minus 4% for individuals. CoopBanks pass-on rates are MRR for cooperatives and MRR plus 3% for individual borrowers.
Rice seed production loans require a marketing contract with the DA. Rice and corn production loans must have crop insurance or mutual guarantee coverage. Marketing loans require a Quedan receipt or acceptable collateral. In absence of collateral, joint and several signatures of officers serve as substitutes.
A CoopBank is delinquent if it fails to pay obligations within 30 days after maturity, incurring 2% per month penalty fee. Default includes failure to pay two drawdowns within six months, diversion of funds, insolvency, violations of agreements, and misrepresentations, leading to full loan payment demands and possible suspension or termination of credit lines.
The loan ceiling for production loans is pegged at P8,000 per hectare.
CoopBanks must submit approved Articles of Incorporation, Board Resolution, and financial reports to DA/ACPC. Upon approval and signing of a Memorandum of Agreement, CoopBanks submit lists of approved farmer loans for drawdown requests, which are evaluated and approved by DA/ACPC officials depending on amount, followed by prompt release of funds to borrowers.
CoopBanks must annually increase their capital and/or deposit base by at least 20% of the amount of program drawdowns to sustain lending operations after program termination.