Secretary Proceso Alcala of the Department of Agriculture is calling for rural banking innovations that will help the agri-fishery sector reduce its estimated P252-billion financing gap and improve its access to credit, a government press release said.

He expressed the urgency for such innovations and expressed concern that the sector had less funding sources, noting that Bangko Sentral ng Pilipinas data show that the number of rural banks nationwide has declined to 607 in December 2010 from 631 institutions the year earlier.

Citing the latest available Agricultural Credit Policy Council  data, Alcala said estimated total credit requirement for palay, corn, coconut, sugarcane, fisheries and other local priority commodities already hit P359 billion in 2010.

"Of this amount, banks were only able to finance P107 billion or 30 percent, leaving a financing gap of about P252 billion," he said.

Alcala noted the agri-fishery sector suffered such gap despite the 13.4 percent growth in domestic agricultural lending during the past year.

He lauded the rural banks for extending to the sector last year loans totaling nearly P57 billion, saying this amount is 5.1 percent higher than what such lenders released in 2009.

Alcala also commended the banks for complying with the Agri-Agra Law.

"Last year, rural banks again recorded the highest compliance with such law with nearly 33 percent of total loans going to agriculture and agrarian reform clients - this is way beyond the 25 percent required under the law," he said.

Such accomplishment by the rural banks also exceeded the entire Philippine banking industry's average compliance of up to 20 percent only, he noted.*PNA

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