Section 18Sec./Art. 18

Operating Principles.- The Corporation in the exercise of its powers shall be guided by the following operating principles:

a. The loanable value and guarantee cover under its various programs shall be scaled progressively in favor of rural-based cooperatives and micro-enterprises vis-a-vis small- and medium-size businesses:

b. The rate of guarantee fees and charges shall be commensurate to the risk covered;

c. Aggregate contingent liability, that is, its outstanding guarantee obligation at any given time, shall not exceed five (5) times its net worth;

d. For agri-aqua commodities stored in bonded warehouses, the guarantee shall be their physical existence when covered by a quedan or warehouse receipt, chattel mortgage, deed of assignment, trust receipt, and other forms of collateral instruments on said commodities;

e. For production and post-production facilities, farm machineries, equipment and implements, the guarantee shall be on the loan extended by a bank or lending institution on the basis of a mortgage thereon, without prejudice to the requirement for an additional or substitute collateral;

f. For production inputs and labor, the guarantee shall be on the loan, provided that it is granted to rural cooperatives, without prejudice to the requirement for a counter-guarantee from nongovernmental organizations, or for some form of acceptable collaterals;

g. The credit-support mechanism, as contemplated herein, may be in the form of assistance in client prospecting, credit evaluation, collateral appraisal, account monitoring, special time deposit, co-financing arrangement, co-guarantee, interest stabilization, liquidity access and other similar incentives for rural borrowers and lending institutions;

h. The guarantee and credit-support system shall be oriented to promote capital formation and savings mobilization in the rural areas;

i. Secondary trading market and liquidity access for participating banks and lending institutions, especially for those operating in small municipalities, shall be developed and promoted by the Corporation for its guaranteed loan papers; and

j. Working relationships shall be harmonized with other government institutions, agencies and instrumentalities engaged in agricultural or rural development.