Allied Bank, Manila Bank open P150-M credit line with Quedancor

Quedan Rural Credit and Guarantee Corp. (Quedancor) will open new loan rediscounting windows with Allied Banking Corp. and Manila Banking Corp., which could in turn open new credit lines for the agricultural and fishery sector.

Recently, it sealed an P800-million worth of rediscounting window with the Land Bank of the Philippines.

"We are finalizing a P100-million credit rediscounting window with Allied Bank and P50 million with Manila Bank," Quedancor president and chief executive officer Nelson Buenaflor said.

The rediscounting window would allow Quedancor to swap debt papers of farmers and fisherfolk and acquire new credit lines from these banks, which are again available for re-lending by Quedancor.

"We have worked out these schemes because of the improvement in the repayment rate of borrowers of Quedancor, which is now at 100 percent," said Buenaflor.

He added that this was also due to the innovative funding and collection scheme implemented by the government-owned company Quendacor.

Loan disbursements to the agriculture, fishery and to the informal sector rose to P1.2 billion last year as against the P914 million the year before.

With these loans releases, Quedancor covered for the continuous slump in lending activities of banks to the agricultural sector last year.

"There was a sudden shift in the composition of our portfolio. Because private banks reduced their exposure to agricultural projects, our guarantee operations have done down and 70 percent of our clients have availed of our direct lending facilities," Buenaflor said.

He further noted that this is also an indication that there is a declining participation of private financial institutions in the guarantee programs, which started as a result of the regional financial crisis, which occurred in 1997. In 1998, local banks loan exposure to the agriculture was seven percent of its total loan portfolio. It further declined to 0.6 percent in 1999.

Buenaflor noted that of its P1 billion in loanable funds, some P750 million were acquired through its several lending programs, while an estimated P300 million were availed of for guarantee operations Quedancor’s lending programs were funded mainly by special allocations from different government agencies, with Quedancor acting as fund manager.