Section 21Sec./Art. 21

Rural Credit Delivery System. An efficient credit delivery system guided by a sound rural credit policy geared towards the needs of small farmers shall be established. The features of the credit delivery system for small farmers shall include, among others, a maximum rate of interest not to exceed seventy-five percent (75%) of commercial rateper annuminclusive of all service, penalty and other charges. It shall also include minimum collateral requirements, accessibility, reasonable repayment terms, expeditious loan documentation and processing procedures. Services shall be expanded to include not only loans for procurement of production inputs but also for other needs and purposes of small farmers such as education and health needs.

The Department of Agriculture, through the Agricultural Credit Policy Council (ACPC) and other concerned agencies, shall give subsidies for the education and training of small farmers on credit awareness, loan acquisition and loan repayment. It shall conduct an intensive information drive that will promote the establishment of strong and viable farmers' organizations such as cooperatives, credit unions, rotating savings, and credit associations and nongovernment organizations (NGOs) which play a major role in increasing small farmers' access to credit. Likewise, the Government shall also set up a system which will provide information on the credit worthiness of potential borrowers.

In order to reduce the risks and administrative costs of lending institutions, the Government shall expand its loan guarantee coverage under the Comprehensive Agricultural Loan Fund to be administered by the ACPC and crop insurance programs to cover not only rice and corn but other crops, livestock, poultry, fishery, and agro-forestry as well. The ACPC shall conduct special projects to promote innovative financing schemes for small farmers. Payments under such insurance program shall be prompt and any delay without just cause shall entitle the beneficiary to reasonable interest rate on the amount due.

In addition, the Government shall promote the development of farmers' organizations. Toward this end, the Government, through the ACPC and other concerned agencies, shall subsidize costs of information dissemination, monitoring, training and registration. The farmers' organizations may serve as conduits of rural banks, private development banks and other banks for effective agricultural credit delivery. An amount shall be earmarked for lending exclusively to farmers' cooperatives at subsidized interest rates.

All agricultural lending programs of the Government are hereby consolidated and placed under the administration of tile Land Bank of the Philippines. The funds shall be augmented by annual budgetary allocations which shall be managed as a self-sustaining fund base by the Land Bank of the Philippines in coordination with the ACPC.

A portion of all loanable agricultural funds shall be utilized for direct lending to small farmers for their production, processing, postharvest and marketing requirements.

To be able to generate funds that will be used to cover for the administrative costs of the agricultural funds being handled by the Land Bank of the Philippines, all government agencies that are involved in the development of the small farmers shall be allowed the option to deposit their funds in the Land Bank of the Philippines.