OFFICE OF THE GOVERNOR

CIRCULAR NO. ______

Series of ______

Subject: Implementing Rules and Regulations of the Mandatory

Agriculture, Fisheries and Rural Development Financing
under Republic Act (R.A.) No. 11901 or “The Agriculture,
Fisheries and Rural Development Financing Enhancement
Act of 2022”

The Monetary Board, in its Resolution No. ___ dated _______,

approved the rules and regulations governing the mandatory agriculture,
fisheries and rural development financing under Republic Act (R.A.) No. 11901,
otherwise known as “The Agriculture, Fisheries and Rural Development
Financing Enhancement Act of 2022”.

Section 1. Section 331 of the Manual of Regulations for Banks (MORB)

is hereby amended to read as follows:

331 AGRICULTURE, FISHERIES AND RURAL DEVELOPMENT

FINANCING

Pursuant to R.A. No. 11901, The Agriculture, Fisheries and Rural

Development Financing Enhancement Act of 2022, the following
guidelines shall govern the grant of agriculture, fisheries and rural
development (AFRD) financing by banks, whether government or
privately owned.

Policy statement. The Bangko Sentral recognizes that

promoting inclusive and broad-based economic growth by ensuring
equal access to opportunities under an environment of sustained
growth and expanding productivity is the key to raising the quality of
life for all. In this regard, the Bangko Sentral supports the State’s
objective of promoting rural development by enhancing access of
rural communities and agricultural and fisheries households to
financial services and programs that increase productivity, enhance
market efficiency, and promote modernization and improve the
welfare and economic prospects of beneficiaries in rural communities
through active participation of banking institutions.

The Bangko Sentral also supports the State’s recognition of

the importance of designing and implementing capacity-building
programs that will develop and improve skill sets and competencies
of farmers, fisherfolk, agrarian reform beneficiaries, and other
agricultural workers which will allow them to operate productive,
profitable and viable agricultural and business ventures, as well as
enhance their paying capacity and access to formal financing
channels.
 Pursuant to R.A. No. 11901, the Landbank of the Philippines
(LBP) and the Development Bank of the Philippines (DBP) shall
continue to promote savings and credit in the rural areas by offering
affordable deposit products such as the basic deposit account for
deposits and low interest rates for loans.

The lending cooperatives, microfinance institutions, retail

banks, rural and thrift banks shall apply minimum interest rates for
wholesale loans obtained from government banks.

Likewise, the LBP and DBP shall use their resources to

innovate, develop, promote and invest in digital, automation
technology, branchless banking and cash agent operations to reach
remote barangays and municipalities; using e-commerce, online
transactions, bank-on-wheels, point of sale devices with retailers and
non-banking institutions, lottery kiosks and mobile phone
applications in making banking services accessible to the rural public.

Toward this end, banking institutions are expected to design

and offer financial products and services that suit the specific
requirements of their agricultural clients, taking into account their
cash flows and the gestation and harvest period of the agricultural
produce/activity/project being financed.

Definition of terms. For purposes of this Section, the following

definitions shall apply:

a. Agrarian reform beneficiary (ARB) refers to a farmer who was

granted land under P.D. No. 27, the “Comprehensive Agrarian
Reform Law of 1998” and R.A. No. 9700 or the “Comprehensive
Agrarian Reform Extension with Reforms” and a regular
farmworker who is landless, irrespective of tenurial
arrangement, who benefited from the redistribution of land
regardless of crops or fruits produced, to include the totality of
factors and support services designed to lift the economic
status of the beneficiary and all other alternative
arrangements to the physical distribution of lands, such as
production or profit-sharing, labor administration, and the
distribution of shares of stock which will allow the beneficiary
to receive a just share of the fruits of the lands one tilled.

The term shall also include registered ARBs'

cooperatives/associations/other farm groups, respectively
endorsed as comprising of ARBs by the nearest office of the
DAR, as well as ARB households.

b. Agrarian reform community (ARC) refers to a barangay or a

cluster of barangays primarily composed of and managed by
ARBs which is organized and willing to undertake the
integrated development of an area and/or their
organizations/cooperatives.

c. Agri-Business refers to agriculture and fishery-related

activities that put farmers, fisherfolk, processors, distributors,
and consumers within a system that produces, processes,
transports, markets, and distributes agricultural and fishery

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products. It encompasses input production, farm and fishery
operations and management, equipment and supplies
manufacturing, food/non-food processing, trading, and
retailing.

d. Agri-Tourism, also referred to as “Farm Tourism” under R.A.

No. 10816, or the “Farm Tourism Development Act of 2016”,
refers to the practice of attracting visitors and tourists to farm
areas for production, educational and recreational purposes. It
involves any agricultural- or fishery-based operation or activity
that brings to a duly-accredited farm tourism camp visitors,
tourists, farmers and fisherfolk who want to be educated and
trained on farming and its related activities.

e. Agricultural lessee refers to any person who, with or without

help from one’s immediate farm household, cultivates the
land owned by another for a certain price in money, in produce
or in both.

f. Agricultural or fisheries household refers to a household with

at least one (1) member of the household who is a farmer, a
fisherman, an ARB, a settler, an agricultural lessee, an
amortizing owner, a farmworker, a fishworker, an owner-
cultivator, a compact farmer, or a tenant farmer.

g. Agricultural value chain (AVC) refers to a set of

actors/players, such as farmers, fisherfolk, traders, suppliers,
processors, and aggregators, who make up the linked
sequence of value-adding activities undergone by an
agricultural product when converted from raw material to the
final form it is presented to the consumers.

h. Agricultural value chain financing (AVCF) refers to the

financial products and services made available to an AVC
following the appropriate evaluation of the AVC's
composition, goal, size and capacity, subject to applicable
regulations under Sec. 313 (AVCF framework).

i. AFRD financing refers to loans and investments to finance

activities that shall enhance productivity and increase income
of an agricultural and fisheries household, thereby promoting
agricultural sector productivity and competitiveness, as well as
sustainable development of rural communities. These shall
include, but not limited to the following activities and
purposes:

(1) off-farm/fishery entrepreneurial activities;

(2) agricultural mechanization/ modernization;

(3) agri-tourism;

(4) environmental, social and governance

projects, including green projects;

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(5) acquisition of lands authorized under the
Agrarian Reform Code of the Philippines and
its amendments;

(6) digitalization/automation of farming, fishery

and agri-business activities and processes;

(7) efficient and effective marketing, processing,

distribution, shipping and logistics, and
storage of agricultural and fishery
commodities;

(8) public rural infrastructure as well as programs

that shall: (a) promote the health and wellness
of farmers, fisherfolk and ARBs, including
members of their households, such as water
and sanitation projects for rural communities;
and (b) address the developmental needs of
rural communities, such as, but not limited to,
projects that promote the livelihood, skills
enhancement, and other capacity-building
activities of the rural community
beneficiaries;

(9) activities identified under the Agro-Industry

Modernization Credit and Financing Program
(AMCFP) under Tittle 1, Chapter 3, Section 23
of R.A. No. 8435, otherwise known as the
“Agriculture and Fisheries Modernization Act
of 1997”, as follows:

(a) Agriculture and fisheries production

including processing of fisheries and
agri-based products and farm inputs;

(b) Acquisition of work animals, farm and

fishery equipment and machinery,

(c) Acquisition of seeds, fertilizer, poultry,

livestock, feeds and other similar
items;

(d) Procurement of agriculture and

fisheries products for storage, trading,
processing and distribution;

(e) Acquisition of water pumps and

installation of tube wells for irrigation;

(f) Construction, acquisition and repair of

facilities for production, processing,
storage, transportation,
communication, marketing and such
other facilities in support of
agriculture and fisheries;

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 (g) Working capital for agriculture and
fisheries graduates to enable them to
engage in agriculture and fisheries-
related economic activities;

(h) Agribusiness activities which support

soil and water conservation and
ecology-enhancing activities;

(i) Privately-funded and LGU-funded

irrigation systems that are designed
to protect the watershed;

(j) Working capital for long-gestating

projects; and

(k) Credit guarantees on uncollateralized

loans to farmers and fisherfolk.

j. Agro-Industry Modernization Credit and Financing Program

(AMCFP) refers to the umbrella credit/financing program of
the government for the agriculture and fisheries sector created
under R.A. No. 8435.

k. Amortizing owners refers to landowners who amortize

payment for the land to a private individual or to the State.

l. Basic deposit account (BDA), as provided under Sec. 213,

refers to interest- or non-interest-bearing account designed to
promote financial inclusion.

m. Cash agent refers to a third-party entity contracted by a

bank to accept and disburse cash on its behalf, and facilitate
self-service deposits, withdrawals and fund transfers, bills
payment and other banking services, as allowed under Sec.
275 (Use of cash agents).

n. Compact farmers refer to those farmers with adjoining

farms operating as a single unit under one (1) management,
farm plan and budget.

o. Farm-to-market road refers to a road linking the agriculture

and fisheries production sites, coastal landing points and post-
harvest facility to the market and arterial road and highway.

p. Farmer refers to a natural person whose primary livelihood

is cultivation of land or the production of agricultural crops,
agroforest products, or livestock, either by oneself, or primarily
with the assistance of their immediate farm household,
whether the land is owned by them or by another person
under a leasehold or share tenancy agreement or arrangement
with the owner thereof.

q. Farmworker refers to a natural person who renders service

for value as an employee or laborer in an agricultural
enterprise or farm regardless of whether the compensation is

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paid on a daily, weekly, monthly or “pakyaw” or contracted
project. The term includes an individual whose work has
ceased as a consequence of, or in connection with, a pending
agrarian dispute who has not obtained a substantially
equivalent and regular farm employment.

r. Farmer’s cooperatives refer to cooperatives composed

primarily of small agricultural producers, farmers,
farmworkers, or other ARBs who voluntarily organize
themselves for the purpose of pooling land, manpower,
technological, financial or other economic resources, and
operate on the principle of one (1) member, one (1) vote. A
juridical person may be a member of a cooperative, with the
same rights and duties as a natural person.

s. Farmer’s and fisherfolk’s organizations or associations refer

to farming or fishing cooperatives, associations or corporations
duly registered with appropriate government agencies and
which are composed primarily of small agricultural producers,
farmers, farmworkers, ARBs, and fisherfolk who voluntarily join
together to form business enterprises or non-business
organizations which they themselves own, control and
patronize.

t. Financial services refer to services extended by banks and

financial institutions (FIs) such as credit/lending, deposits,
rediscounting, investments, and insurance.

u. Fisherfolk refers to people directly or personally and

physically engaged in catching and processing fishery and/or
aquatic resources, and in fish farming or aquaculture whether
the fish species is grown in tanks, fishponds or other types of
enclosures.

v. Fishworker refers to a person whether or not regularly

employed in commercial fishing and related industries, whose
income is either from wages, profit sharing or stratified sharing
basis, including those working in fishpens, fish corrals/traps,
fishponds, prawn farms, sea farms, salt beds, fish ports, fishing
boat or trawlers, or fish processing and/or packing plants, but
excluding administrators, security guards and overseers.

w. Green projects refer to green economic activities and

projects. Aside from activities that promote climate change
adaptation and mitigation, green projects also cover
environmental and efficiency improvements, natural capital
preservation and resource mobilization.

x. Loanable funds, during the first year of effectivity of R.A. No.

11901 or from 18 August 2022 to 17 August 2023, refer to total
funds generated by a bank starting from 20 April 2010, after
which loanable funds shall be determined based on the funds
generated from 18 August 2023 or the second year of effectivity
of R.A. No. 11901, the computation of which is described in this
Section.

Page 6 of 19
y. Micro, small and medium enterprise (MSME) refers to any
business activity or enterprise defined as such under Sec. 332
and existing laws.

z. Newly established bank refers to a domestic or foreign bank

without banking presence in the Philippines prior to the
issuance of its Certificate of Authority to Operate. It shall not
include banks that have been formed through the acquisition,
purchase of ownership of the voting stock of an existing
domestic bank or the merger or consolidation of banks.

aa. Owner-cultivators refer to natural persons who own lands

by purchase, inheritance, or land distribution by the State.
Owner-cultivators can operate the farm themselves, supervise
wage labor or delegate operations to farmers.

ab. Philippine Identification Card (PhillD), refers to the non-

transferrable identification card issued by the PSA to all
citizens and resident aliens registered under the Philippine
Identification System (PhilSys), which serves as the official
government-issued identification document of cardholders in
dealing with all government agencies, local government units,
government and controlled corporations, government
financial institutions, and all private sector entities as defined
under Sec. 904.

ac. Post-harvest activities refer to threshing, drying, milling,

grading, storing, and handling of produce and such other
activities of similar nature such as stripping, winnowing,
chipping and washing.

ad. Post-harvest facilities refer to threshers, moisture meters,

dryers, weighing scales, milling equipment, fish ports, fish
landings, ice plants and cold storage facilities, processing
plants, warehouses, buying stations, market infrastructure and
transportation facilities, and such other facilities supporting
post-harvest activities.

ae. Public rural infrastructure refers to infrastructure in rural

communities such as highways, streets, bridges, tunnels,
railways, railroads, transport systems, ports, airports,
hydropower projects, canals, dams, irrigation, government
buildings and housing projects, public schools, public
hospitals, public health centers, public markets,
slaughterhouses, warehouses, solid waste management,
sewerage, flood control, drainage, dredging and other similar
infrastructure projects.

af. Registry System for Basic Sectors in Agriculture (RSBSA)

refers to an electronic compilation of basic information on
farmers, farmworkers, and fisherfolk. The database, which
includes the profile of farmers, farm workers and fisherfolk,
and additional information such as farm parcels and fisheries,
among others, is mainly used to help government planners
and policymakers in formulating policies for agricultural
development.

Page 7 of 19
 ag. Rural community refers to an area that is defined as such
by the Philippine Statistics Authority (PSA).

ah. Rural financial institution (RFI) refers to any financial

institution established and is operating in a rural community.

ai. Settlers refers to persons who range from the forest-clearing

pioneers, including indigenous people, with a subsistence
economy to the better equipped and more experienced
farmers.

aj. Sustainable finance, as defined under Sec. 153, refers to any

form of financial product or service which integrates
environmental, social and governance criteria into business
decisions that support economic growth and provide lasting
benefit for both clients and society while reducing pressures
on the environment. This also covers green finance which is
designed to facilitate the flow of funds towards green
economic activities and climate change mitigation and
adaptation projects.

ak. Tenant farmer refers to one (1) who cultivates another’s land
under a sharing or leasehold agreement.

Rural community beneficiaries. AFRD financing shall be

extended to rural community beneficiaries, particularly the farmers,
fisherfolk, ARBs, ARCs, settlers, agricultural lessees, amortizing
owners, farmworkers, fishworkers, owner cultivators, compact
farmers, tenant farmers, and members of their household and their
MSMEs, as well as farmer’s and fisherfolk’s cooperatives, organizations
and associations in good standing, regardless of capitalization, based
on the feasibility of the project and their paying capacity, their
estimated production, and/or securities they can provide as well as
such assets as may be acquired by them from the proceeds of the loan
and investments.

Required allocation and period covered for AFRD financing.

Banks shall for a period of ten (10) years from 28 July 2022 to 27 July
2032 set aside at least twenty-five percent (25%) of their total loanable
funds for AFRD financing: Provided, That newly-established banks
defined under Item "z" in this Section (Definition of terms) shall be
exempted from the said required allocation for a period of five (5)
years from the date of commencement of their operations.

Modes of compliance. Banks may comply with the mandatory

credit requirement through the following modes granted or
purchased after the applicable reference cut-off date:

a. Actual extension of loans to rural community beneficiaries

(gross of allowance for probable losses), for purposes of
financing AFRD activities under Item "i" in this Section
(Definition of terms).

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b. Purchase of eligible loans listed in Item “a” in this Section
(Modes of compliance) on a “without recourse” basis from
other banks and Fls.

c. Purchase of eligible securities (gross of allowance for

probable losses but net of unamortized premium or
discount), to wit:

(1) Investments in debt securities, including

those issued by the DBP and the LBP, the
proceeds of which shall be used to finance
activities under Item "i" in this Section
(Definition of terms) as well as electronic
platforms that will facilitate AVCF and supply
chain financing transactions among actors in
agriculture;

(2) Investments in sustainable bonds, including

green bonds;

(3) Investments in shares of stock in the following

institutions, subject to existing rules and
regulations governing equity investments of
banks:

(a) RFIs,

(b) Philippine Crop Insurance Corporation

(PCIC); or

(c) Companies that primarily engage in

activities under Section 23 of R.A. No. 8435,
as defined under Item "i(9)" in this Section
(Definition of terms), including venture
capital corporations that benefit rural
community beneficiaries; and

(4) Investments in unsecured subordinated debt

securities issued by banks that meet the
definition of regulatory capital under
Appendix 59:

d. Grant of loans and other credits (gross of allowance for

probable losses), to wit:

(1) Investments in deposit accounts and/or fixed

term deposit products with RFIs;

(2) Wholesale lending granted to RFIs;

(3) Rediscounting facility granted by banks to

other banks covering eligible AFRD financing;

(4) Actual extension of loans intended for the

construction and upgrading of infrastructure,

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 including, but not limited to, farm-to-market
roads, as well as the provision of post-harvest
facilities and other public rural infrastructure
as defined under Item “ae” in this Section
(Definition of terms), for the benefit of the
rural community;

(5) Actual extension of loans to borrowers, other

than rural community beneficiaries, for
purposes of financing activities identified
under Section 23 of R.A. No. 8435, as defined
under Item "i(9)" in this Section (Definition of
terms), including palay housing and farming
homestead;

(6) Actual extension of loans to agri-business

enterprises that maintain agricultural
commodity supply-chain arrangements
directly with qualified borrowers;

(7) AVCF, including financing to electronic

platforms that will facilitate AVCF and supply
chain financing transactions among actors in
agriculture;

(8) Actual extension of sustainable loans,

including green loans;

(9) Innovation development loans under Section

334 (Mandatory Credit Allocation for
Innovation Development) that are used to
finance eligible activities under Item "i" in this
Section (Definition of terms); or

(10) Purchase of eligible loans listed under Item

Nos. "d(2)" to "d(9)" in this Section (Modes of
compliance)on a "without recourse" basis
from other banks and FIs:

Provided, That the loans and investments that are counted as

compliance are not funded by proceeds from the issuance of debt
securities, and/or deposit/lending of other banks that have been
counted as compliance with the mandatory credit.

The loans to finance activities that shall generally benefit ARBs,

ARCs, or other priority sectors, as may be determined by the
Agriculture Credit Policy Council (ACPC), shall be counted at ten times
(10x) their outstanding amount, or as otherwise prescribed by the
ACPC, for purposes of determining compliance with the mandatory
AFRD financing requirement.

The Bangko Sentral may identify other actions that may be

considered as eligible modes of compliance with the mandatory
AFRD financing. The modes of compliance shall be subject to review

Page 10 of 19
by ACPC for purposes of determining whether the same are adequate
to support the financing requirements of rural communities.

Computation of total loanable funds. Loanable funds, as

defined under Item “x” in this Section (Definition of Terms) shall be
computed, as follows:

a. The net increase from applicable reference cut-off date to

date of the report of the individual accounts booked under
the Regular Banking Unit which represent the following:

(1) Total peso deposit (demand, savings, now,

time and negotiable CTD accounts)
excluding:

(a) Deposits of banks

(b) Deposits of the National Government,

including its political subdivisions and
instrumentalities, such as, but not limited
to, the BIR, BOC, and LGUs, and

(c) Deposits of government-owned and-

controlled corporations,

(2) Bills payable excluding:

(a) Borrowings from the Bangko Sentral in

the form of the following:

(i) rediscounting,

(ii) emergency advances,

(iii) availment of overdraft facilities, or

(iv) other obligations,

(b) Borrowings from the National

Government, including its political
subdivisions and instrumentalities,

(c) Interbank loans payable,

(d) Other borrowings, in the form of the

following:

(i) Repurchase agreements with the

Bangko Sentral,

(ii) Repurchase agreements with

banks,

Page 11 of 19
 (iii) Certificates of assignment/
participation with recourse with
banks,

(iv) Securities lending and borrowing

agreements with banks, and

(v) Other borrowings with banks

(e) Proceeds from special on-lending

programs to the agriculture and agrarian
reform sector issued by RFIs,

(f) Proceeds from special on-lending

programs, other than for agriculture and
agrarian reform, including Time
Certificates of Deposit-Special Financing,
and

(g) Other deposit substitutes in the form of

emergency advances from the PDIC, and

(3) Bonds payable, net of unamortized premium

or discount, other than bond issuances of the
DBP and LBP, the proceeds of which shall be
used exclusively to finance activities under
Item "i" in this Section (Definition of terms),

b. Less/(Add) the net increase/(decrease) from applicable

reference cut-off date to date of the report of the required
reserves against a week ago level of the following accounts
booked under the Regular Banking Unit (RBU):

(1) Deposit liabilities, and

(2) Deposit substitutes.

c. Less/(Add) provisions for liquidity equivalent to five

percent (5%) of the net increase/(decrease) applicable
reference cut-off date in total peso deposit liabilities as
defined herein under Item “a(1)” in this Section (Computation
of total loanable funds).

Syndicated type of AFRD financing. Banks may grant a

syndicated type of loan AFRD financing, either between or among
themselves. The mechanics, including the recording of such
syndicated type of loan transactions, shall follow existing practices
and regulations applicable both to the lead bank and other
participating bank(s). Accordingly, the booking of loans shall only be
for the amount of actual participation of each syndicate-member
bank concerned. Memorandum entries, references or notations shall
be made for the other participating bank(s).

Interest and other charges. Interest, service fees and other

charges shall be governed by the terms and conditions of the financial
instruments and existing rules and regulations.

Page 12 of 19
 Submission of reports. A quarterly report on the compliance
with the mandated credit allocation for AFRD financing under R.A. No.
11901, which shall be considered a Category A-3 report, shall be
submitted to the appropriate supervising department of the Bangko
Sentral within fifteen (15) banking days from the end of the reference
quarter.

Consolidated compliance. The compliance with AFRD

mandatory allocation of funds under R.A. No. 11901 shall be allowed on
a groupwide basis (i.e., consolidation of parent/foreign bank branch
and subsidiary bank/s) so that excess compliance of any bank in the
group can be used as compliance for any deficient bank in the group:
Provided, That the subsidiary bank/s is/are at least directly or indirectly
majority owned by the parent bank and/or head office, in the case of
foreign bank branches: Provided, further, That the parent
bank/foreign bank branch shall be held responsible for the
compliance of the group.

The consolidated report shall be submitted by the parent

bank/foreign bank branch in the prescribed form and shall be
supported by the individual reports of the parent bank/foreign bank
branch within the group and subsidiary bank/s duly signed by each
bank’s authorized signatory.

Sanctions. The following sanctions shall be applicable for any

violation of this Section:

a. Penalties/sanctions applicable to banks:

(1) Monetary fines

(a) For non-compliance/under-

compliance

Annual penalty of one-half of one

percent (0.5%) of amount of non-
compliance/ undercompliance, or at rates
prescribed by the Bangko Sentral, shall be
computed on a quarterly basis following
this formula:

Penalty = 0.00125 x amount of non-

compliance/under-compliance as of the
end of the reference quarter

Amount of non-compliance/under-
compliance = twenty-five percent (25%) of
total loanable funds less reported amount
of compliance with the mandatory AFRD
financing.

(b) For erroneous/ delayed/erroneous and

delayed/unsubmitted reports

Page 13 of 19
 A bank shall be subject to the fines
for erroneous/delayed/erroneous and
delayed/unsubmitted reports on
compliance with the mandated credit
allocation for AFRD financing under R.A.
No. 11901 in accordance with the
provisions of Sec. 171 (Sanctions on reports
for non-compliance with the reporting
standards)

(c) For false/misleading statements

A bank which has been found to

have made a false or misleading
statement in its required report on
compliance with the mandated credit
allocation AFRD financing shall be subject
to the appropriate monetary penalties for
willful making of a false or misleading
statement under Sec. 1102, which shall be
reckoned on a daily basis from the day
following the due date of submission of
the affected report until an amended
report has been submitted to the Bangko
Sentral.

(2) Non-monetary fines

In addition to the above daily monetary fines,

any or all of the administrative sanctions, as
provided under Section 37 of R.A. No. 7653, as
amended, may be imposed upon any bank for
willful delay or refusal to submit reports or
willful making of a false or misleading
statement to the Bangko Sentral, without
prejudice to criminal sanctions against
culpable persons provided under Sections 34,
35 and 36 of R.A. No. 7653, as amended.

b. Penalties/ sanctions applicable to directors/ officers

concerned of the bank

Directors/ officers of a bank which have been found to

have willfully falsely certified/ submitted misleading
statements and/or willfully violated any of the provisions of
this Section shall be subject to the appropriate monetary
penalties under Sec. 1102 and/or the other administrative
sanctions under Section 37 of R.A. No. 7653, as amended.

The imposition of the above sanctions is without

prejudice to the filing of appropriate criminal charges against
culpable persons as provided under Section 35 of R.A. No. 7653,
as amended, for the willful making of a false/ misleading
statement.

Page 14 of 19
 c. Disposition of penalties collected

The total penalties collected on non-

compliance/under-compliance with the mandatory AFRD
financing under Item “a(1)(a)” above shall be allocated by the
Bangko Sentral as follows:

Percentage Purpose and Recipient

Allocation of Penalties Collected
75% Special Fund1
Proportion Recipient Purpose
35% of Department Titling and
Special of Agrarian parcelization of
Fund Reform landholdings
covered with
collective
Certificate of
Land
Ownership
Awards
32.5% of LBP Credit facility
Special with minimal
Fund interest rates
and with
minimum
collateral
requirements
for farmers and
30% of DBP fisherfolk
Special registered in
Fund the RSBSA,2
farmers and
fisheries
cooperatives
and
associations,
and
microfinance
institutions3

1
After the provisions related to the mandatory credit quota ceases to have effect
on 27 July 2032, the tenth (10th) year from the approval of R.A. No. 11901, all
unutilized funds allocated for any of the implementing agencies and all loan
collections shall be remitted to the General Fund.
2
This shall include farmers and fisherfolk with PhilID.
3
All loan repayments and other collections shall be used to fund credit facility of
the LBP, DBP and AAIIBP: Provided, That LBP, DBP and AAIIBP shall be allowed to
reimburse direct costs incurred in the management of the fund, but in no case
shall these reimbursements exceed two percent (2%) of the average quarterly
loan balance.

Page 15 of 19
 Percentage Purpose and Recipient
Allocation of Penalties Collected
2.5% of Al-Amanah Credit facility
Special Islamic with minimal
Fund Investment interest rates
Bank of the and with
Philippines minimum
(AAIIBP) collateral
provided requirements
that the for ARBs in the
National Bangsamoro
Government Region3
is a majority
shareholder
of AAIIBP.

20% Agricultural- and Fishery-Related

Organizational-Capacity and Institution-
Building Programs and Activities1
Proportion Recipient Purpose
50% of LBP Agricultural-
funding and fishery-
50% of DBP related
funding organizational–
capacity- and
institution-
building
programs and
activities
5% Administrative
BSP expenses
incurred by the
BSP

The annual penalties for non-compliance/under-compliance

with the mandatory AFRD financing that are collected by the Bangko
Sentral under this Section shall be remitted directly to the
implementing agencies within one (1) year and six (6) months from
the imposition of same.

Section 2. Appendix 7 of the MORB is hereby amended to change the

report title of “Report on Compliance with the Mandatory Agri-Agra Credit
(AgriAgra)” to “Report on Compliance with the Mandatory AFRD Financing ”.

The said new report shall be submitted electronically to the

Department of Supervisory Analytics (DSA) following the submission timeline
below:

Reporting Period Covered Timeline

30 September 2022 15th banking day after end-
December 2022
31 December 2022 15th banking day after end-January
2023
1 January 2023 - 27 July 2032 15th banking day after end of
reference quarter

Page 16 of 19
 Section 3. The following Sections/Appendices of MORB are also
hereby amended:

MORB
Amendments
Section/Appendix
Section 313 (Regulatory Loans granted to agricultural value chain
incentives), Item “a” actor(s)/player(s), who are rural
community beneficiaries under Sec. 331
shall be considered as compliance to the
mandatory agriculture, fisheries and rural
development financing; and
Section 332 (Definition Agrarian reform credits/other agricultural
of terms), Item “b(5)” loans granted under R.A. No. 11901, other
than those eligible for compliance with
the mandatory allocation of credit for
MSMEs;
Appendix 144, Section 1 Agrarian reform beneficiary (ARB) , as
(b) defined under item (a), Definition of
Terms, Section 331, refers to a farmer who
was granted land under P.D. No. 27, the
“Comprehensive Agrarian Reform Law of
1998” and R.A. No. 9700 or the
“Comprehensive Agrarian Reform
Extension with Reforms” and a regular
farmworkers who is landless, irrespective
of tenurial arrangement, who benefited
from the redistribution of land, regardless
of crops or fruits produced, to include the
totality of factors and support services
designed to lift the economic status of
the beneficiary and all other alternative
arrangements to the physical distribution
of lands, such as production or profit-
sharing, labor administration, and the
distribution of shares of stock which will
allow the beneficiary to receive a just
share of the fruits of the lands one tilled.

The term shall also include registered

ARBs' cooperatives/associations/other
farm groups, respectively endorsed as
comprising of ARBs by the nearest office
of the DAR, as well as ARB households.
Appendix 144, Section 1 Agricultural Projects shall refer to the
(c) following undertakings or activities listed
under Item (i), Definition of Terms, Sec.
331, such as, but not limited to:

i. Off-farm/fishery entrepreneurial
activities;

ii. Agricultural
mechanization/modernization;

Page 17 of 19
 MORB
Amendments
Section/Appendix

iii. Agri-tourism;

iv. Environmental, social and

governance projects, including
green projects;

v. Acquisition of lands authorized

under the Agrarian Reform Code of
the Philippines and its
amendments;

vi. Digitalization/automation of
farming, fishery and agri-business
activities and processes;

vii. Efficient and effective marketing,

processing, distribution, shipping
and logistics, and storage of
agricultural and fishery
commodities; and

viii. Public rural infrastructure; as well

as programs that shall: (a) promote
the health and wellness of farmers,
fisherfolk and ARBs, such as water
and sanitation projects for rural
communities; and (b) address the
developmental needs of rural
communities, such as, but not
limited to, projects that promote
the livelihood, skills enhancement,
and other capacity-building
activities of the rural community
beneficiaries.

It shall also include agro-industrial

projects that promote the provision and
delivery of the abovementioned
agricultural activities.
Appendix 144, Section 1 Farmers’ and Fisherfolk’s Organizations or
(m) Associations, as defined under Item (s),
Definition of Terms, Section 331, refer to
farming or fishing cooperatives,
associations or corporations duly
registered with appropriate government
agencies and which are composed
primarily of small agricultural producers,
farmers, farmworkers, ARBs, and
fisherfolk who voluntarily join together to
form business enterprises or non-

Page 18 of 19
 MORB
Amendments
Section/Appendix
business organizations which they
themselves own, control and patronize.
Appendix 144, Section Socialized Credit Facility. LBP shall
2 allocate at least five percent (5%) of its
regular loan portfolio for socialized credit
to qualified small farmers, small fisherfolk
and ARBs. This facility shall solely finance
agricultural projects pursuant to the
provisions of Section 4 of R.A. No. 11901,
otherwise known as “The Agriculture,
Fisheries and Rural Development
Financing Enhancement Act of 2022”.

xxx

All loans extended through this special

socialized credit facility shall qualify as
part of LBP’s direct compliance with the
mandatory agriculture, fisheries and rural
development financing pursuant to R.A.
No. 11901.

xxx
Appendix 144, Section Purpose
4 (b)
To finance the working capital
requirement of the conduits to Small
Farmers and Small Fisherfolks, and ARBs
to finance the latter’s agricultural projects
pursuant to the provisions of Section 4 of
R.A. No. 11901, otherwise known as “The
Agriculture, Fisheries and Rural
Development Financing Enhancement
Act of 2022”.

Section 4. This Circular shall take effect fifteen (15) calendar days
following its publication either in the Official Gazette or in a newspaper of
general circulation.

FOR THE MONETARY BOARD:

FELIPE M. MEDALLA
Governor

__ September 2022

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