Law Summary
Declaration of Policy
- State policy promotes equal access to opportunities enhancing rural development.
- Focus on sustained growth, expanding productivity, modernization, and market efficiency in rural agriculture.
- Enhance access to financial services for rural agricultural sector.
Definitions of Key Terms
- Accredited Rural Financial Institution: BSP-accredited, substantially agri-agra related portfolios.
- Agrarian Reform Beneficiary: Farmers granted land under various agrarian laws including those benefiting from land redistribution and support services.
- Agricultural Guarantee Fund Pool (AGFP): Fund composed of percentages from government financial surpluses and penalties collected for noncompliance.
- Agricultural Lessee, Amortizing Owners, Compact Farmers, Farmers, Farmworkers, Fishworkers, Owner-Cultivators, Settlers, Tenant Farmers defined with respect to their relation to agricultural production and land.
- Farmer's Cooperatives and Farmer's and Fisherfolk's Organizations or Associations: Collective groups mainly composed of agricultural producers or beneficiaries organized for economic pooling and business/nonbusiness purposes.
- Financial Services: Credit, deposits, rediscounting extended by banks.
- Philippine Crop Insurance Corporation (PCIC) and Quedan and Rural Credit Guarantee Corporation (QUEDANCOR): Government entities supporting agricultural insurance and credit guarantees.
Agriculture, Fisheries and Agrarian Reform Credit, Insurance and Financing System
- Creation of a credit, insurance and financing system for agriculture, fisheries, and agrarian reform sectors.
- Beneficiaries: Farmers, fisherfolk, agrarian reform beneficiaries, settlers, lessees, amortizing owners, farmworkers, fishworkers, owner-cultivators, compact farmers, cooperatives and associations.
- Loans cover agricultural production inputs, equipment, facilities, land acquisition, infrastructure supporting agriculture/fisheries, and marketing activities.
Credit Beneficiaries
- Credit extended to individual beneficiaries or their cooperatives and associations in good standing.
- Loan approval based on project feasibility, paying capacity, estimated production, and securities offered.
Credit Quota Requirement
- Banks, government or private, must allocate at least 25% of total loanable funds to agriculture and fisheries credit.
- At least 10% reserved for agrarian reform beneficiaries.
- Loanable funds counted from the effectivity date of the Act.
- A joint review by DA, DAR, and BSP after three years to assess effectiveness with findings submitted to Congress.
Modes of Compliance for Banks
- Banks may comply by:
- Investing in bonds issued by DBP or LBP or opening Special Deposit Accounts with accredited rural financial institutions, with proceeds exclusively for on-lending to agriculture and agrarian reform sectors.
- Rediscounting eligible agricultural credit papers with universal, commercial banks but no dual counting as compliance.
- Lending for construction and upgrading of infrastructure benefitting agricultural and fishery sectors.
- Investing directly in rural financial institutions’ preferred shares or wholesale lending for on-lending to agriculture and agrarian reform sectors.
- Investing in shares of QUEDANCOR and PCIC.
- Funding activities under the Agro-Industry Modernization Credit and Financing Program (AMCFP).
- Separate accounting and restrictions on counting such funds under the 25% quota.
Review of Alternative Compliance Modes
- DA, DAR, BSP to jointly review compliance modes after three years to ensure direct targeting of agriculture, fisheries and agrarian reform sectors.
- Findings to be submitted to Congress.
Reporting Requirements
- BSP to provide annual compliance reports to DA, DAR, and Congress.
Penalties for Noncompliance
- BSP imposes administrative sanctions and penalties for banks not complying with credit allocation.
- Penalties computed at 0.5% of noncompliance and directed to agri-agra sector development.
- 90% of penalties divided between AGFP and PCIC as per sector needs.
- Remaining 10% allocated to BSP for administrative costs.
Repealing Clause
- Repeals Presidential Decree No. 717, specific sections of RA No. 7900 and RA No. 7721 inconsistent with this Act.
- Other inconsistent laws, decrees, executive orders, regulations are repealed or modified accordingly.
Separability Clause
- Invalidity of any provision does not affect the validity of other parts of the Act.
Transitory Provision
- PD No. 717 remains effective until the implementing rules and regulations of this Act take effect.
Effectivity
- Act takes effect fifteen days after publication in the Official Gazette or widely circulated newspaper.