BAGUIO CITY (PIA) – – The Bangko Sentral ng Pilipinas (BSP) and the Department of Agriculture – Agricultural Credit Policy Council (DA – ACPC) are undertaking a series of Countryside Bank Survey (CBS) to analyze trends and present emerging policy issues on bank behavior towards lending to the agricultural sector using branch level data.
The first CBS was conducted in 2021 with 1,905 bank respondents and its results are currently being disseminated nationwide with the baseline report for North Luzon banking institutions and industry associations presented at the BSP Regional Office here, Tuesday (April 11).
BSP Monetary Board Member and Concurrent Vice – chair of the DA – ACPC Bruce Tolentino, outlined that the CBS survey is crucial for the public to understand what is going on with rural credit and finance with countryside lending, especially to rural and agricultural enterprises.
It also coincides with the release of the amended Agriculture/Agrarian Reform Loan Quota Law, which requires banks to allocate 25 percent of their loan portfolio to the sector or any rural enterprise that is part of the agriculture value chain, Tolentino added.
The first CBS results show that in 2021, the share of agriculture to total loans granted in most banking units ranged from 11 – 15 percent of total loans and benefitted at most 500 borrowers per banking unit.
Compared to the 2020 data, the numbers showed a decline and that demand for agricultural loans remained relatively lukewarm despite the low policy rate environment.
The CBS also shows that most of the challenges encountered by banks in their lending operations in 2021 were brought about by the COVID – 19 pandemic. Other significant challenges cited by survey responders in lending to agriculture sector were reluctance of banks/investors to capitalize in agriculture due mainly to the sector’s vulnerability to natural calamities, fluctuation in agriculture prices and outdated farming skills/technology and banks’ limited physical network in rural areas.
BSP Monetary Board Member Anita Linda Aquino, meantime, shared the importance of the CBS in improving the productivity of the farmers which is vital to the development of the agriculture sector and in ensuring food and nutrition security for the country.
“The survey results highlight the importance of analyzing the trends in bank lending to the agricultural sector using branch level data and correlating this with the underlying structural challenges in agriculture. By doing so we can set our priorities and channel our action plans into tangible options,” she said.
“It is widely recognized that access to credit plays a critical role in the development of the agriculture sector and the overall economy. Without fairly priced credit from the formal financial sector, farmers face difficulties in accessing the inputs needed to increase efficiency in production, thus limiting their profitability and contributions to food and nutrition security”, Aquino stressed.
Other guests during the 2021 CBS Baseline Report Dissemination were DA – ACPC Executive Director Jocelyn Alma Badiola and Director Magdalena Casuga and BSP Research Academy Principal Researcher Veronica Bayangos and Researcher Ferdinand Co. **JDP/CCD-PIA CAR
