Question & AnswerQ&A (Republic Act No. 11901)
The short title of Republic Act No. 11901 is "The Agriculture, Fisheries and Rural Development Financing Enhancement Act of 2022."
The main policy objective is to promote inclusive and broad-based economic growth by ensuring equal access to opportunities, promoting rural development through financial services and programs that increase productivity, market efficiency, modernization, and improve welfare of beneficiaries in rural communities with active participation of banking institutions.
ARBs include farmers granted land under Presidential Decree No. 27, the Comprehensive Agrarian Reform Law of 1988, Republic Act No. 9700, and regular landless farmworkers benefiting from land redistribution. It also includes registered ARB cooperatives/associations endorsed by the Department of Agrarian Reform (DAR) and their households.
It is a financing system designed to improve productivity, income, competitiveness, and welfare of rural community beneficiaries by providing loans and investments to fund activities enhancing agricultural and fisheries productivity and income, including agricultural modernization, mechanization, agri-tourism, environmental projects, infrastructure, capacity building, and related activities.
The financing shall be extended to rural community beneficiaries such as farmers, fisherfolk, ARBs, ARCs, settlers, agricultural lessees, amortizing owners, farmworkers, fishworkers, owner-cultivators, compact farmers, tenant farmers, cooperatives, associations, MSMEs, or organizations in good standing of these beneficiaries based on project feasibility and paying capacity.
All banking institutions, except newly-established banks during their first five years of operation, must allocate at least twenty-five percent (25%) of their total loanable funds to agricultural and fisheries financing.
Banks may comply by lending directly to rural beneficiaries, investing in debt securities issued by DBP and LBP, opening deposit accounts with Rural Financial Institutions (RFIs), rediscounting eligible agricultural papers, lending for rural infrastructure, lending to agri-business enterprises with supply chain arrangements, engaging in sustainable finance, investing in PCIC shares, or financing electronic platforms facilitating agricultural finance transactions.
The Bangko Sentral ng Pilipinas (BSP) shall impose administrative sanctions and penalties computed at 0.5% of noncompliance or rates prescribed by the BSP Monetary Board. Penalties collected are remitted to implementing agencies, with portions allocated for administrative expenses and capacity-building programs for farmers and fisherfolk.
The Special Fund consists of penalties collected for noncompliance with the mandatory credit requirement. Thirty-five percent (35%) is allocated to the DAR for titling and parcelization of landholdings covered by collective CLOAs, while sixty-five percent (65%) funds credit facilities managed by LBP and DBP for lending to registered farmers and fishers, cooperatives, MSMEs, and microfinance institutions.
The mandatory credit quota provisions will cease to have effect ten (10) years from the approval date of the Act. Any unutilized funds and loan collections thereafter will be remitted to the General Fund.