MANILA - The House Committee on Banks and Financial Intermediaries is seeking to amend a 1963 law that created the Land Bank of the Philippines, and a presidential decree that expanded its functions.
In his explanatory note for House Bill 10440 reorganizing the Land Bank of the Philippines, Quirino lone district Rep. Junie Cua said LandBank has grown as "an institution from being the financing arm of the agrarian reform program to become the second-largest full service-commercial bank in the country in terms of assets.”
On July 21, 1973, through Presidential Decree no. 251, the bank’s function was expanded, becoming the first universal bank in the country.
The Comprehensive Agrarian Reform Law, as amended by the Comprehensive Agrarian Reform Program Extension with Reforms, identifies the bank as a financial intermediary of the national government for the agrarian reform program.
“It has also transformed further into a policy-oriented financial entity supporting the national government’s socio-economic development agenda as embodied in the Philippine Development Plan 2017-2022,” said Cua who also chairs the House committee.
Cua also cited the crucial role of the economic recovery efforts from the COVID-19 crisis because of the various policy intervention through the Bayanihan 1 and 2 laws, which served as the backbone of the state’s economic rescue efforts.
The bank also consistently complied with the Agri-Agra law which requires banking institutions to allot 15% of their total lending portfolio for agricultural loans.
“The constantly evolving Philippine financial landscape, coupled with the Bank's redefined roles in supporting the national government’s sustainable development agenda, necessitates to institute a standalone legal and operational framework for LandBank,” said Cua.
“This policy initiative seeks to amend the LandBank Charter that will place the Bank in a stronger position to pursue further the policy thrusts of the national government especially on countryside development while sustaining its institutional viability amid a highly competitive banking industry," he said.
Land Bank president and CEO Cecilia Borromeo believes the measure will ensure the bank will keep up with its mandate to be inclusive of the national economy.
"Amending the LandBank Charter to institute a standalone legal and operational framework for the bank will place it in a stronger position to pursue further the developmental objective of the bank while keeping up with constantly shifting financial landscape, sustaining its institutional viability amid a highly competitive banking industry," Borromeo said.
"The proposed amendments to the Charter shall enhance its function to allow the bank to boost its capital-raising capabilities, sustain a competitive workforce and streamline its banking processes."
Among the proposed amendments include opening up one-third of the government-owned bank to private entities such as small farmers, fisherfolks, organizations, among others as approved by the finance secretary and upon the recommendation of the board of directors.
The national government, under the proposal, shall at all times maintain its two-thirds ownership.
However, the Department of Finance suggested a 20% allocation to private entities but is still subject to finalization and clarification.
The House banks and financial panel is set to finalize and approve the bill next week on its final form.