House approves the proposed Agri-Agra Credit Condonation Act of 2012

THE House of Representatives has approved on third and final reading a bill mandating the condonation of unpaid interests, penalties and surcharges on loans secured by farmers, fisherfolks and agrarian reform beneficiaries from various government agencies.

With 168 votes, the House unanimously approved House Bill 6561, which seeks to facilitate the reintegration into the financial and banking system of the farmers, fisherfolks and agrarian reform beneficiaries by giving them access to new and additional government credit programs.

Authored by Reps. Cresente C. Paez and Jose R. Ping-ay (Party-list, Coop-NATCCO), the proposed “Agrarian and Agricultural Credit Condonation Act of 2012” aims to help the farmers, fisherfolks and their organizations regain access to government and commercial credit facilities by improving their credit worthiness.

The measure provides that the justification of the condonation shall only be due to force majeure or market aberration and not be applied on the willful default of the borrowers to pay the loans.

The condonation program shall cover the following: Credit Assistance Program-Program Beneficiaries Development of the Department of Agrarian Reform (DAR); Agricultural and Agrarian Reform Credit secured through the terminated credit program schemes of the DAR, i.e., Dutch Rural Development Assistance Programme (DRDAP), DAR Direct Lending Financing Program (DDLFP), DAR Special Projects Office (SPO) Direct and DAR-DBP SPO Window III Financing Program for Agrarian Reform Beneficiaries;

Resettlement Loan Assistance Program of the DAR for individual agrarian reform beneficiaries; Agricultural credit secured through the High Yield Crop Loan Assistance Program of the Department of Agriculture (DA); Agricultural credit secured through Microfinance Program for Small Farmers and Fisherfolks and the Household of the PCFC; Cooperative Development Loan Fund of the Cooperative Development Authority (CDA); Farmers Level Green Center of the National Food Authority (NFA); and CARP-Barangay Marketing Center (CARP-BMC) of QUEDANCOR.

The bill covers those applicants who have an accumulated payment of not less than 5% of the principal at the time of application for condonation.

The bill also encourages borrowing discipline and enhancement of credit worthiness by instituting a graduation process which shall be followed in consonance with the plan of payment such that a borrower shall only be granted a one-time condonation.

The measure provides that the condonation of unpaid interests, penalties and surcharges from loans acquired through conduit banks and financial institutions shall be in conformity with the applicable general banking laws and regulations of the Bangko Sentral ng Pilipinas.

It institutes that the period of payment of the restructured loan shall be determined according to the financial capacity of the borrowers upon the approval of the application. Such approval for application for loan condonation shall serve as the basis for the concerned agency/corporation to write off the unpaid interests, penalties and surcharges condoned.

The restructured loans shall be restored to performing status or status of good standing upon 3 consecutive payments of the borrower of the required amortization. Government agencies may issue the appropriate certifications to the borrower upon satisfaction of said condition.

Furthermore, the measure mandates that annual collection from payment of loans shall be remitted to the Bureau of Treasury as a Trust Fund which shall be utilized as Agrarian Reform Fund.

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