BPI Bank of Philippine Island Disagrees with Agri-Agra Law
Bank of Philippine Island (BPI) president Aurelio Montinola does not agree with the provision of Agri-Agra Law mandating banks to allocate 25 percent of their loanable funds to the agriculture sector.
“25 percent is high,” he told reporters recently.
Agri-Agra Law or Republic Act 10000 was approved by lawmakers last February after deliberations on the original law known as Presidential Decree 717. Compliance date of the law is April 30, 2010.
This law mandates banks to allocate 25 percent of their loanable funds to the agriculture sector, 10 percent of which is for agrarian reform beneficiaries.
However, the law cites as alternative sectors to agriculture the education, healthcare, housing and other social services sectors.
“Mandatory lending is not the way to do it,” Montinola said pointing out that “mandated lending is counter-productive.”
“But as of this moment we have to follow the law,” he stressed.
The BPI chief noted that historically, the demand is high on the agriculture sector not the agrarian reform sector.