Law Summary
Declaration of Policy
- Promote inclusive and broad-based economic growth.
- Ensure equal access to opportunities and sustained growth.
- Enhance rural development by improving financial services access to rural communities.
- Support agricultural productivity, market efficiency, modernization, and welfare.
- Landbank of the Philippines (LBP) and Development Bank of the Philippines (DBP) to promote savings and affordable credit in rural areas.
- Promote digital, automated, and branchless banking technologies for remote areas.
- Capacity-building programs for farmers, fisherfolk, agrarian reform beneficiaries (ARBs), and related communities.
Definition of Terms
- Extensive definitions including Agrarian Reform Beneficiary (ARB), Agrarian Reform Community (ARC), Agri-business, Agri-tourism, Agricultural Lessee, Agricultural or fisheries household, Agricultural Value Chain (AVC), and others.
- Specifies roles of farmers, fisherfolk, farmworkers, cooperatives, and financial institutions.
- Defines terms like Basic Deposit Account, Cash agent, Compact farmers, Micro, Small, and Medium Enterprises (MSME), Sustainable Finance, and Tenant Farmer.
Agriculture, Fisheries and Rural Development Financing System
- Establishes a financing system to improve productivity, income, and welfare of rural beneficiaries.
- Covers a broad range of activities: agricultural modernization, off-farm ventures, agri-tourism, green projects, digitization, acquisition of land, marketing, processing, rural infrastructure, and health and wellness programs.
- Banking institutions to offer tailored financial products fitting agricultural cycles.
Rural Community Beneficiaries
- Financing extended to rural beneficiaries, cooperatives, associations, MSMEs based on project feasibility and creditworthiness.
Credit Quota
- All banks (except newly established ones for 5 years) must allocate at least 25% of total loanable funds to agricultural and fisheries financing.
- Definition of total loanable funds provided by the Bangko Sentral ng Pilipinas (BSP).
Modes of Compliance
- Compliance through direct lending to rural beneficiaries.
- Alternative compliance modes include:
- Investing in government-backed debt securities.
- Deposits or investments in Rural Financial Institutions (RFIs).
- Rediscounting agricultural credit paper.
- Investing in shares or wholesale lending to RFIs.
- Lending for rural infrastructure.
- Lending to agri-businesses with direct supply chain links.
- Agricultural Value Chain Financing (AVCF).
- Sustainable finance.
- Investment in Philippine Crop Insurance Corporation or venture capital corporations.
- Financing electronic platforms for supply chain transactions.
- Loans benefiting ARBs and similar groups counted tenfold toward compliance.
- ACPC authorized to review compliance modes and recommend adjustments.
Annual Reports
- BSP to report yearly to ACPC and Congress on compliance and penalties collected.
- Monitoring of banking compliance by BSP.
Penalty Clause
- BSP to impose administrative and monetary penalties for noncompliance.
- Penalties set at 0.5% of noncompliance amount or BSP-prescribed rates.
- Penalties remitted to implementing agencies.
- BSP retains 5% of penalties for administrative costs.
- 20% allocated to capacity-building programs to empower farmers and fisherfolk.
Special Fund
- Composed of penalties from noncompliant banks, net of BSP retained amounts and capacity-building allocations.
- BSP remits penalties to implementing agencies within specified time.
Use of the Special Fund
- Allocation:
- 35% to Department of Agrarian Reform (DAR) for land titling and parcelization.
- 65% to be managed equally by LBP and DBP for low-interest credit facilities to farmers, fisherfolk, cooperatives, and microfinance institutions.
- 2.5% of DBP’s share allocated to Al-Amanah Islamic Investment Bank of the Philippines for Islamic communities in Bangsamoro region.
- Loan repayments fund further lending; management cost reimbursement capped at 2% of loan balance.
Sunset Clause
- Mandatory credit quota requirement expires 10 years after effectivity.
- Unused funds and loan collections revert to the General Fund thereafter.
Congressional Oversight
- Congressional Oversight Committee on Agricultural and Fisheries Modernization (COCAFM) supervises implementation and fund usage.
Implementing Guidelines
- BSP to issue necessary implementing rules and regulations within 60 working days after Act’s approval.
- Consultation to involve relevant banks, government agencies, microfinance groups.
Separability Clause
- Invalidation of any part of the Act does not affect the remainder.
Repealing Clause
- Republic Act No. 10000 (Agri-Agra Reform Credit Act of 2009) repealed.
- Other conflicting laws, regulations, orders amended or repealed accordingly.
Effectivity
- The Act takes effect 15 days after publication in the Official Gazette or a newspaper of general circulation.