DAVAO CITY—The move to rescue the ailing rural banks is necessary and important, as these banks are directly serving the countryside.

“It is only necessary and right to do that because we are in the frontline in the rural areas in terms of banking and credit,” said John Jambo Regencia, assistant vice president of The Enterprise Bank Inc.’s small business lending.

Rural banks provide micro-credit lending to small farmers and fisherfolk, “and including what we call the urbanized entrepreneurs, such as the fishball vendors,” the bank official said.

“These are also the people that can hardly access credit from commercial banks. We, in the rural banks, have the experience in dealing with them,” Regencia added.

He said that the rural banks “can accept collateral even in agricultural form.”

The 32-year-old Enterprise Bank has 10 branches, six of them in the Agusan-Surigao provinces. It also has 18 kiosks.

Extending microfinance loans has shown that small businesses could indeed flourish even during hard times and in underserved communities, Regencia said.

The bank’s microfinance loans reached P120 million, up by P35 million from the previous year, according to it 2006 report.

This year, Regencia said that the bank has allocated P101 million for microfinancing, aside from a separate portfolio for other products such as rice and banana.

So far, there were 16,500 borrowers under its microfinancing that ranges from P5,000 to P10,000.

Regencia said the government “should look again into the high borrowing rate imposed on these loans,” saying that the interest rate “would already be higher because we also have to recover on some items in the operation, such as gasoline for our collectors.”

This week, House Speaker Prospero Nograles said rural banks needed all the assistance they could get to continue serving the countryside and achieve food security.

He said he wanted that the measure, authored by An-Waray Party-list Rep. Florencio Noel, be passed immediately to suspend the required capital-adequacy ratio of rural banks for two years.

Nograles also said several congressmen supported his proposal to use pork-barrel funds and funds from the Land Bank of the Philippines to extend credit facilities to farmers through rural banks.

A percentage of the loans of commercial banks went to meet the credit needs of the farm sector, estimated at P200 billion in 2007. The banking sector lent only P48 billion, or 24 percent, of the requirement, the Department of Agriculture (DA) said.

Agriculture Secretary Arthur Yap has criticized the inability of farmers to access credit despite the Bangko Sentral ng Pilipinas and government financial institutions being awash in billions of pesos in funds that could be lent to borrowers in the provinces.

THE government has abandoned its bid to a balanced budget and instead will allow its financial plans to run a deficit of up P75 billion, or about 1 percent of the gross domestic product.

WHEN liquidity problems struck the preneed industry in 2005, 49-year-old office personnel Diosdada Marquez was worried that her insurance provider might not be able to pay its obligations to her retirement policy that would mature that year.

NEWLY established Sterling Bank of Asia Inc. expects to be fully operational by 2012, and plans to buy a “problem-free” commercial bank within four years from now, president Lamberto Villena said Wednesday.

Senate Minority Leader Aquilino Pimentel Jr. is pushing for a partial tax exemption for electric cooperatives, but only those servicing missionary rural areas.

Lawmakers sidestepped lengthy bicameral talks on differing provisions of the income-tax reform bill after House members agreed to just adopt the Senate version of the measure increasing allowable exemption claims for individual and corporate tax filers.

DAVAO CITY—The move to rescue the ailing rural banks is necessary and important, as these banks are directly serving the countryside.

THE peso yesterday closed at its intra day low of P43.72 per dollar, from P43.75, following an uptrend in most of the region’s currencies as crude oil prices come off their peaks.