Landbank adopts risk mitigating measures

MANILA, Philippines - State-owned Land Bank of the Philippines (Landbank) continued to adopt measures to mitigate risks of lending to small farmers and fisherfolk, its top official said over the weekend.

Loan disbursements to this sector have already reached P285.5 billion from 1991 to 2010, said Landbank president and chief executive officer Gilda Pico.

“The bank has strengthened the implementation of mitigating controls for lending to small farmers and fisherfolk who in most cases do not have hard collaterals to offer,” she said.

One measure employed by the bank is stricter accreditation criteria for cooperatives.

Specially, Landbank uses the Cooperative Accreditation Criteria and the Countryside Financial Institution (CFI) Risk Assets Acceptance Criteria.

These two are used in assessing the cooperative and CFI’s eligibility to access Landbank’s credit facilities and other services.

The risk asset acceptance measurement serves as Landbank’s ultimate measure of risk acceptance for all its credit programs.

Aside from the accreditation and risk asset acceptance criteria, Landbank has also adopted the use of the Enterprise-based Approach in extending credit and other services.

As part of its credit enhancements, Landbank uses the PCIC Insurance Coverage, the Guarantee coverage of the Agricultural Guarantee Fund Pool (AGFP), the Credit Surety Fund (CSF) and other guarantee funds.

Furthermore, Landbank also encourages market tie-up between producers or cooperatives and their buyers or processors through the signing of the so-called Production Technical and Marketing Agreements (PTMA). The agreement embodies the collection mechanism of loans extended by the bank to the cooperatives.

In 2010, Pico said the bank reported written-off accounts amounting to P471.19 million for loan releases to cooperatives and CFIs.