The House of Representatives has approved on third and final reading House Bill 187 which seeks to grant farmers, fisherfolk and agrarian reform beneficiaries relief from unpaid loan obligations through a new condonation program.
The proposed “Agrarian and Agricultural Loan Restructuring and Condonation Act” aims to provide farmers, fisherfolk 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.
Such loans were secured by farmers, fisherfolk and agrarian reform beneficiaries from the Department of Agrarian Reform (DAR), Department of Agriculture (DA), People’s Credit and Finance Corporation (PCFC), Cooperative Development Authority (CDA), National Food Authority (NFA), and Quedan and Rural Credit Guarantee Corporation (QUEDANCOR).
The new scheme is expected to free farmers, fisherfolk and agrarian reform beneficiaries from the “bondage of debt” through the condonation of unpaid interests, penalties and surcharges of their existing loans.
The bill provides that in order to provide safeguards and prevent abuse, the proposed condonation shall be granted only on the following conditions: (1) 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 wilful default of the borrower to pay such loans; (2) the accumulated payments of not less than five percent of the loan principal shall have been paid at the time of application for condonation; (3) 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 one-time condonation only; and (4) 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.
Upon approval of the condonation, the borrower’s 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 Reform Fund.
The condonation program covers the following: (a) Agricultural and Agrarian Reform credit secured through the Credit Assistance Program-Program Beneficiaries Development of the DAR; (b) Agricultural and Agrarian Reform credit secured through the terminated credit program schemes of the DAR, such as the Dutch Rural Development Assistance Program (DRDAP), DAR Direct Lending Financing Program (DDLFP), DAR Special Projects Office (SPO) Direct, and the SPO Window III Financing Program for Agrarian Reform Beneficiaries of the DAR and the Development Bank of the Philippines (DBP); (c) Resettlement Loan Assistance Program of the DAR for individual agrarian reform beneficiaries; (d) agricultural credit secured through the High Yield Crop Loan Assistance Program of the DA; (e) agricultural credit secured through Microfinance Program for Small Farmers and Fisherfolk and the Household of the PCFC; (f) Cooperative Development Loan Fund of the CDA; (g) Farmers Level Grain Center of the NFA; (h) Comprehensive Agrarian Reform Program-Barangay Marketing Center (CARP-BMC); and (i) all agri-credit guarantee programs of QUEDANCOR.
According to the principal authors of the bill, COOP-NATCCO Party-list Reps. Anthony Bravo and Sabiniano Canama, HB 187 aims to promote comprehensive rural development and agrarian reform through measures that will free farmers, fisherfolk, and agrarian reform beneficiaries from the bondage of debt and poverty.