Section 7Sec./Art. 7

Modes of Compliance. Banks may comply with the mandatory credit requirement by lending to rural community beneficiaries, to finance agricultural and fishery-related activities as enumerated under Section 4 of this Act. Banks may also comply with the mandatory financing requirement through other means as follows:

(a) Invest in debt securities, including those issued by the DBP and the LBP: Provided, That the proceeds from said debt securities shall be used to finance activities under Section 4 hereof: Provided, further, That the proceeds from debt securities issued by the DBP and the LBP shall be separately accounted for and shall not be considered for purposes of computing the loanable funds under Section 6 hereof of the said banks;

(b) Open deposit accounts and/or invest in fixed term deposit products with RFIs: Provided, That such deposit accounts/products shall be separately accounted for by the depository bank and shall not be considered for purposes of computing the loanable funds of the said banks as described in Section 6 hereof;

(c) Rediscount with banks eligible paper covering agriculture, fisheries and agrarian reform credits: Provided, That rediscounted paper shall no longer be eligible as compliance on the part of the originating bank;

(d) Invest directly in shares of stock of RFIs, subject to prevailing laws, rules or regulations, or lend wholesale to RFIs: Provided, That the wholesale loans shall be credited as compliance of the bank acting as wholesale lender alone;

(e) Lend for the construction and upgrading of infrastructure, including but not limited to, farm-to-market roads, as well as the provision of post-harvest facilities and other public rural infrastructure that will benefit the rural community;

(f) Lend to agri-business enterprises that maintain agricultural commodity supply-chain arrangements directly with rural community beneficiaries;

(g) Undertake AVCF to actors/players in the AVC that benefits rural communities;

(h) Engage in sustainable finance;

(i) Invest in shares of stock of the Philippine Crop Insurance Corporation (PCIC) or in companies that primarily engage in activities under Section 4 hereof, including investments in venture capital corporations, that benefit rural community beneficiaries; and

(j) Provide financing to electronic platforms that will facilitate AVCF and supply chain financing transactions among actors in agriculture:

Provided, That the loans and investments that are counted as compliance are not funded by proceeds from the issuance of debt securities, and/or deposit/lending of other banks that have been counted as compliance with the mandatory credit: Provided, further, That loans to finance activities that shall generally benefit ARBs, ARCs, or other priority sectors, as may be determined by the Agricultural Credit Policy Council (ACPC), shall be counted at ten times (10x) their outstanding amount, or as otherwise prescribed by the ACPC, for purposes of determining compliance with the mandatory agricultural and fisheries financing requirement.

The modes of compliance enumerated in this section shall be subject to review by the ACPC after implementation to determine whether these are adequate to support the financing requirements of rural communities and recommend to Congress for appropriate action.

The BSP, the Department of Agriculture (DA) and the DAR may provide inputs to the review process in their capacity as members of the ACPC.1a⍵⍴h!1

Further, the BSP shall be authorized to identify other actions that may be considered as eligible modes of compliance with the mandatory credit to rural community beneficiaries.