The House of Representatives has endorsed for Senate approval a measure seeking to condone the unpaid loan interests secured by farmers, fishermen and agrarian-reform beneficiaries.
Party-list Reps. Anthony Bravo and Sabiniano Canama of Coop-Natcco, principal authors of the House Bill 187, said the proposed Agrarian and Agricultural Loan Restructuring and Condonation Act aims to provide farmers, fishermen and agrarian-reform beneficiaries the opportunity to regain access to government and commercial credit facilities through the condonation of unpaid interests, penalties and surcharges on their existing loans obtained through government lending programs.
The lawmakers said such loans were secured by the said beneficiaries from the Department of Agrarian Reform (DAR), Department of Agriculture (DA), People’s Credit and Finance Corp. (PCFC), Cooperative Development Authority (CDA), National Food Authority (NFA) and Quedan and Rural Credit Guarantee Corp. (Quedancor).
According to the lawmakers, farmers and agrarian-reform beneficiaries are not only entrepreneurs but are also partners in the evolution of a “better and brighter country. It is, therefore, imperative upon use to take an overwhelming care and attention by condoning these interests that burdened the debt,” they said.
It added the new scheme is expected to free the farmers, fishermen and agrarian-reform beneficiaries from the “bondage of debt” through the condonation of unpaid interests, penalties and surcharges of their existing loans.
The bill also provides that, in order to provide safeguards and prevent abuse, the proposed condonation shall be granted only on the following conditions:
It is limited to force majeure, which the measure defines as “events whether natural or political, beyond the reasonable control of a loan borrower, which have a material adverse effect on the ability of the borrower to pay an obligation,” or to market aberration and shall, in no case, be applied for the willful default of the borrower to pay such loans;
The accumulated payments of not less than 5 percent of the loan principal shall have been paid at the time of application for condonation;
To encourage borrowing discipline and enhance creditworthiness, a graduation process shall be followed in consonance with the plan of payment such that a borrower shall be granted a onetime condonation only; and
The condonation of unpaid interests, penalties and surcharges from loans acquired through conduit banks and financial institutions and the agencies mentioned above shall be in conformity with the applicable general banking laws and regulations of the Bangko Sentral ng Pilipinas (BSP).
The bill said, upon approval of the condonation, the borrowers’ financial capacity will determine the payment period for the restructured loan, and payments will be remitted to the Bureau of Treasury (BOTr) under the agrarian-fund.
Meanwhile, the condonation program covers the agricultural and agrarian-reform credit secured through the Credit Assistance Program-Program Beneficiaries Development of the DAR; agricultural and agrarian-reform credit secured through the terminated credit program schemes of the DAR, such as the Dutch Rural Development Assistance Program, DAR Direct Lending Financing Program, DAR Special Projects Office Direct and the SPO Window III Financing Program for Agrarian Reform Beneficiaries of the DAR and the Development Bank of the Philippines (DBP).
It also covers resettlement Loan Assistance Program of the DAR for individual agrarian-reform beneficiaries and agricultural credit secured through the High Yield Crop Loan Assistance Program of the DA.
Agricultural credit secured through Microfinance Program for Small Farmers and Fisherfolk and the Household of the PCFC; Cooperative Development Loan Fund of the CDA; Farmers Level Grain Center of the NFA; Comprehensive Agrarian Reform Program-Barangay Marketing Center; and all agri-credit guarantee programs of Quedancor have been also included under the program.
The bill said the DA, CDA, PCFC, the Agriculture Credit Policy Council and the BSP shall promulgate the implementing rules and regulations within 60 days from the effectivity of the act.