BSP backs bill seeking easier credit for farmers
PHILSTAR
MANILA, Philippines — Monetary authorities are pushing for the immediate passage of a bill amending the old warehouse receipts law to help boost the access of farmers to financing.
The Bangko Sentral ng Pilipinas (BSP) and the International Finance Corp. (IFC) rallied support for the immediate passage of the Warehouse Receipts (WR) Financing Bill during a round table discussion with over 40 representatives from banking associations, government agencies and the private sector.
The bill, “An Act Providing for the Revised Warehouse Receipts Law of the Philippines” has already been approved by the House of Representatives and has already been transmitted to the Senate.
Aside from tackling the legislative process for the bill, the participants exchanged knowledge on WR finance practice in developed markets, the needs and digitalization of the agriculture sector and the next steps for the country’s lenders and policymakers to move forward with WR finance.
The bill aims to strengthen and modernize the Warehouse Receipts Law of 1912 by establishing a central electronic registry where goods and products can be deposited in exchange for a warehouse receipt that can easily be traded, bartered or sold in order to obtain credit.
This would help boost the confidence of banks and other financial institutions on the viability of warehouse receipts as loan collateral.
Based on the experience of other countries, a well-functioning WR system could help raise farmer income and access to credit, reduce post-harvest losses, improve stability of market prices, and increase food security.
WR financing is also a priority initiative for micro, small and medium enterprises (MSMEs) under the National Strategy for Financial Inclusion 2022-2028.
According to the BSP, MSMEs and agriculture remain among the most vulnerable sectors of the country’s population, despite accounting for a large portion of employment in the Philippines.
It pointed out that households headed by fisherfolk and farmers are among the poorest and the least banked in the country, with three out of 10 owning formal financial accounts.
Modernizing the Warehouse Receipts Law of 1912 could promote wider acceptance of warehouse receipts as credible collateral for bank loans, the BSP said.
