Scope of Risk Weighting for Loans Guaranteed by AGFP
- Applies to loans extended to small farmers and fisherfolk engaged in palay and food production projects.
- The loans guaranteed by AGFP are assigned a risk weight of twenty percent (20%).
- This is a preferential risk weighting compared to the standard 100% risk weight for other assets.
Conditions for Risk Weighting
- A separate fund must be maintained specifically to guarantee loans originated by banks.
- The maximum leveraging ratio of the fund is three (3), meaning the fund can guarantee loans up to three times the amount of the money in the fund.
- The fund guaranteeing the loans must be invested in assets that have a zero percent (0%) risk weight under the risk-based capital adequacy framework.
Application to Different Bank Types
- The amendments apply to all banks under the MORB's risk-based capital adequacy framework including:
- Universal and commercial banks (Appendix 63b)
- Stand-alone thrift banks, rural banks, and cooperative banks (Appendix 63c)
- The same risk weighting and conditions for AGFP-guaranteed loans apply uniformly across these banking categories.
Effective Date and Implementation
- The circular implementing these amendments takes effect fifteen (15) calendar days after publication.
- Publication can be in the Official Gazette or a newspaper of general circulation.
Legal Authority and Issuance
- The amendments were adopted pursuant to Monetary Board Resolution No. 276 dated 16 February 2012.
- The circular was promulgated by the Monetary Board, signed by the BSP Governor, Amando M. Tetangco, Jr.
- This ensures regulatory backing and formal incorporation into the MORB guidelines.