Leticia presentation to rbap11.11

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  • RBAP President Ian Eric Pama, heads and representatives of the rural banks all over the country, other developmental partners, good afternoon. On behalf of LANDBANK, I would like to thank RBAP for giving us the opportunity to present the Bank’s various programs for countryside financial institutions. The CFIs have always been one of the Bank’s priority sectors in recognition of your significant contribution in economic development in the countryside. In fact, since 1988, the rural banks have been LANDBANK’s partners in extending credit assistance to the agricultural sector, particularly to the small farmers and fisherfolk in the countryside.
  • My presentation will focus on the following: First, on the LANDBANK’s extent of credit assistance to CFIs, particularly to the rural banks. Second, on the run-down of the bank’s various programs available to CFIs, which I’m sure most of you, are familiar with. Finally, the bank’s most current credit program - the Grassroots Development Program. Also, in a nutshell, I will discuss the CFI Calamity Assistance Program and Agricultural Guarantee Fund Pool Program.
  • As of August 31, 2011, LANDBANK has been able to provide credit assistance to 226 rural banks nationwide which comprised 39% of the 585 rural banks registered with BSP.
  • LANDBANK-assisted CFIs as of August 31, 2011 reached 284 of which 226 or 80% are rural banks.
  • Our credit assistance to small farmers and fisherfolk as of August 31, 2011 reached P22.220 B. Of this amount, about 49% or P10.991 B was channeled through CFIs. About 72% of this amount or P7.898 B was lent thru rural banks. LANDBANK would like to seek your assistance further in increasing these figures by availing our other services.
  • Various programs have been developed by LANDBANK for CFIs to suit your needs. Let me discuss each of them briefly.
  • LANDBANK’s Rediscounting Facility or Easy Rediscounting Facility allows you to rediscount the promissory notes of you borrowers with LANDBANK thereby getting additional capital for your credit operations or finance your other businesses. On the other hand, the bank’s Term-Loan Rediscounting Facility is meant to address your needs for a long-term facility to intensify the flow of credit to the rural sector.
  • LANDBANK’ Microfinance Program for MFI-Retailers supports the CFIs in meeting the new mandatory allocation of credit resources for micro, small and medium enterprises as provided for under BSP Circular No. 625, series of 2008, and under the Magna Carta for MSMEs. Meanwhile, Stand-by Clearing Line is meant for CFIs with clearing arrangement with LBP. The facility is made available to cover the temporary overdraft or to restore the Clearing Account balance of the CFI to the required minimum deposit balance.
  • Fifth is the bank’s CFI Home Lending Program which provides the CFIs with a credit fund for the housing loan requirements of their borrowers. Lastly, we also have the Grassroots Development Program and the Calamity Assistance Program which I will be presenting in a short while.
  • Moving on to the bank’s Capital Enhancement Program for CFIs… For purposes of increasing and strengthening the capital base of CFIs, LANDBANK offers the second round of capital infusion programs to CFIs whereby LANDBANK puts in investment in preferred shares to qualified CFIs under three (3) modules, namely: the Developmental, Business and Risk Recovery, depending on the needs of the CFIs, subject to BSP approval. Also, as part of its continuing assistance to CFIs, LANDBANK developed a rehabilitation equity program or the Risk Recovery Program-Type 2. This allows the CFI to extend the redemption of the matured equity investments for a period of ten (10) years from the date of conversion.
  • LANDBANK also introduced the Unsecured Subordinated Debt Facility or Tier 2 Capital to help improve the capital base of the participating CFIs, thus, allowing them to expand credit to small farmers and fisherfolk. The facility provides for the subscription of LANDBANK to the Lower Tier 2 or unsecured subordinated notes offering of CFIs equivalent to 50% of its Tier 1 or core capital subject to BSP approval and guidelines.
  • On other programs and services, LANDBANK has this Clearing Arrangement Facility, a correspondent banking service by LBP with CFIs which have authority from BSP to accept demand deposit and Negotiable Order of Withdrawal (NOW) Accounts. LANDBANK also offers the Correspondent Banking Line for those CFIs that are interested to become a conduit in the distribution of cash grants under the DSWD’s Conditional Cash Transfer Program. We hope that you will take advantage of all these credit facilities and programs to complement your operations.
  • As a measure to introduce financial services in the unserved areas, the LANDBANK has implemented the Grassroots Development Program.
  • LANDBANK’s GDP primarily aims to encourage the CFIs and MFIs to expand outreach and extend financial services in areas where there is very limited banking presence, and where small farmers and fisherfolk are not organized
  • Under the program, qualified participating CFIs/MFIs shall identify, accredit and lend to grassroots enabling partners, such as agri-business entities and non-government organizations, which will in turn relend to SFF borrowers for livelihood activities in the identified unserved areas.
  • This slide shows how the credit assistance of LANDBANK will flow – From LANDBANK to CFIs or MFIs, down to the Grassroots Enabling Partners, then to the target beneficiaries of the program, which are the small farmers and fisherfolk in the identified unserved municipalities of LBP. As of October 31, 2011, there are 58 unserved municipalities identified by LBP.
  • GDP has two (2) components, namely: the a ) credit component; and the b) technical assistance component. The available credit facility under the program is term loan-working capital to be used for relending by participating qualified CFIs/MFIs. As incentive to the participating CFIs/MFIs, technical assistance in the form of trainings on micro-agri, cashflow lending, delinquency management and MIS data base enhancements, among others, shall be provided on the basis of loan availment under the program.
  • The following are the features of GDP and the policies governing the said program.
  • On the Eligibility Criteria, the participating CFIs should meet the following: First, accredited in the LANDBANK’s Rediscounting Program; Second, with CAMELS Rating of 3.0 or better in the last two recent examinations, with no rating below 3 in any of the CAMELS block during the said examination; and Third, with Net Past Due Ratio of not more than 25%;
  • CFIs should also have… Capital adequacy ratio (CAR) of at least 12%; Portfolio at Risk (PAR) of not more than 10% (for those with microfinance portfolio); With satisfactory repayment in all facilities with creditor banks; Lastly, No major BSP findings during the most recent examination
  • As what I have mentioned earlier, the available credit facility under GDP is term loan to be used as working capital for relending. The participating conduits can be granted a loan equivalent to up to 10% of its networth, provided the amount is within the conduit’s borrowing capacity.
  • LANDBANK shall release the proceeds of the loan to CFIs in lump sum on the basis of the masterlist of prospective sub-borrowers submitted by the grassroots enabling partners to CFIs/MFIs, payable in three (3) years. The interest rate of term loan is at prevailing market rate which is currently priced at 5.5% per annum, fixed for the duration of the loan.
  • The loan may be secured by any or a combination of the following: Assignment of CFI/MFI’s Promissory Notes plus underlying collaterals Assignment of proceeds of AGFP guarantee for loans extended by Grassroots Enabling Partners to small farmers and fisherfolk, if applicable
  • As to the Mode of Payment… The principal portion shall be paid in equal quarterly payments to start at the end of the first quarter from the date of loan release. The corresponding interest rate shall also be paid quarterly, based on the loan outstanding balance.
  • To facilitate the loan availment, the CFI should submit: Masterlist of prospective sub-borrowers of the grassroots enabling partners. On top of the bank’s standard pre-release documents, LANDBANK will conduct validation of at least 20% of the total promissory notes of the sub-borrowers
  • Another program which is relevant to you in the light of the occurrence of natural calamities is the CFI-Calamity Assistance Program. This is a joint program of BSP, LBP and PDIC.
  • Who may avail of the CFI-CAP? Rural Banks, Cooperative Banks and Thrift Banks that were affected by typhoons, disasters and other natural calamities as declared by the Provincial or National Disaster Risk Reduction and Management Council, or by the Office of the President.
  • For CFIs to be eligible under the program, they should meet the following criteria: First, with loan portfolio affected by the calamity as validated by the LANDBANK Lending Center; Second, with CAR of at least 10% prior to the occurrence of calamity based on the latest BSP validated CAR; and Third, with no unrectified/uncorrected serious exceptions/irregularities based on the latest BSP examination and those with no arrearages prior to the calamity.
  • The CFI can be granted a loan equivalent to 90% of the affected current outstanding portfolio, or P5.0 M, whichever is lower, provided the loan amount does not exceed the CFI’s borrowing capacity.
  • The term of the loan is up to 7 years, payable in quarterly amortizations. The CFI can just issue post dated checks to secure the loan.
  • Lastly, we have the Agricultural Guarantee Fund Pool. AGFP is a credit risk mitigating mechanism created under Administrative Order No. 225-A issued on May 26, 2008. The program mandates all GOCCs and GFIs to allocate and contribute 5% of their 2007 surplus for projects in rice and other food production. The Department of Agriculture, in coordination with LANDBANK, exercises direction and supervision over the AGFP, through a Governing Board and a Program Management Committee.
  • AGFP primarily aims to encourage financial institutions like you to lend to small farmers and fisherfolk by providing guarantee cover on loan portfolio not covered by any collaterals.
  • Eligible Participating Lending Institutions or PLIs are the…. Banks SMEs and Large Corporations; and NGOs. and Farmers’ Organizations, other than Cooperatives.
  • The eligible sub-loans that can be guaranteed by AGFP are those loans of small farmers and fisherfolk used for palay production and other food commodities production.
  • Among the important features of AGFP are as follows: One, it covers guarantees equivalent to 85% of the principal loan extended by the PLIs; Two, it guarantees all risks except fraud on the part of the conduits; and Three, claimant PLIs are ensured of quick payment of guarantee claims.
  • There are only a number of documentary requirements for guarantee claims; and The loans guaranteed by the AGFP carry a risk-weight of 20% (as provided under BSP Circular No. 713). This is an opportunity for you to further expand your credit to the agricultural sector.
  • On the Guarantee Fee The participating lending institutions (PLIs) shall pay a guarantee fee equivalent to 2% per annum based on the amount of the loan extended to eligible sub-borrowers. On the Claims Procedure As I mentioned earlier, participating lending institutions (PLIs) are ensured of quick payment of guarantee claim. The PFI can claim 80% of amount covered, to be paid within 15 days from application/submission of complete claim documents. The remaining 20% shall be paid within 30 days after the conduct of validation.
  • Should you need further details on the programs just presented, you may want to visit LANDBANK booth. Our representatives would be happy to entertain your queries and concerns.
  • In closing, let me leave you with a quote from the father of modern advertising, John Wanamaker: “One may walk over the highest mountain one step at a time.” To you our CFI-partners, may you continue finding ways to offer quality services to your clients in the countryside who count on you for their credit and other banking needs. Your support to these key players in the Philippine economy is a step towards building a progressive and developed nation that we envision to have. Thank you and good afternoon.
  • Leticia presentation to rbap11.11

    1. 1. Presented By: Ms. LETICIA P. VILLA Vice President Land Bank of the Philippines LBP Programs for Countryside Financial Institutions
    2. 2. Outline of Presentation <ul><li>Grassroots Development Program </li></ul><ul><li>CFI Calamity Assistance Program </li></ul><ul><li>Agricultural Guarantee Fund Pool </li></ul><ul><li>LBP Credit Assistance to CFIs </li></ul><ul><li>Available LBP Programs for CFIs </li></ul><ul><ul><li>Credit </li></ul></ul><ul><ul><li>Equity Investment </li></ul></ul><ul><ul><li>Other Programs & Services </li></ul></ul><ul><li>Programs to be Presented </li></ul>
    3. 3. LBP Credit Assistance to CFIs
    4. 4. Industry Data of Rural Banks As of 31 August 2011 Source: BSP website
    5. 5. Number of LBP-Assisted CFIs (284) As of 31 August 2011
    6. 6. As of 31 August 2011
    7. 7. Available LBP Programs for CFIs
    8. 8. <ul><ul><li>1. Rediscounting Line/Easy Rediscounting Facility (Short-Term) </li></ul></ul><ul><ul><li>2. Term-Loan Rediscounting Facility </li></ul></ul><ul><ul><li>3. Microfinance Program for MFI-Retailers </li></ul></ul><ul><ul><li>4. Stand-by Clearing Line </li></ul></ul><ul><ul><li>5. CFI Home Lending Program </li></ul></ul><ul><ul><li>6. Grassroots Development Program </li></ul></ul><ul><ul><li>7. CFI Calamity Assistance Program </li></ul></ul>Credit Programs
    9. 9. <ul><ul><li>Rediscounting Line/Easy Rediscounting Facility (Short-Term) </li></ul></ul><ul><ul><li>Term-Loan Rediscounting Facility </li></ul></ul><ul><ul><li>3 . Microfinance Program for MFI-Retailers </li></ul></ul><ul><ul><li>4. Stand-by Clearing Line </li></ul></ul><ul><ul><li>5 . CFI Home Lending Program </li></ul></ul><ul><ul><li>7. Grassroots Development Program </li></ul></ul><ul><ul><li>8. CFI-Calamity Enhancement Program </li></ul></ul>Credit Programs
    10. 10. <ul><ul><li>Rediscounting Line/Easy Rediscounting Facility (Short-Term) </li></ul></ul><ul><ul><li>Term-Loan Rediscounting Facility </li></ul></ul><ul><ul><li>Microfinance Program for MFI-Retailers </li></ul></ul><ul><ul><li>Stand-by Clearing Line </li></ul></ul><ul><ul><li>5 . CFI Home Lending Program </li></ul></ul><ul><ul><li>6 . Grassroots Development Program </li></ul></ul><ul><ul><li>7. CFI Calamity Assistance Program </li></ul></ul>Credit Programs
    11. 11. <ul><ul><li>Capital Infusion for CFIs (2nd Tranche) </li></ul></ul><ul><ul><ul><li>Developmental Module </li></ul></ul></ul><ul><ul><ul><li>Business Module </li></ul></ul></ul><ul><ul><ul><li>Risk Recovery Program-Types 1 & 2 </li></ul></ul></ul><ul><ul><li>Unsecured Subordinated Debt Facility </li></ul></ul>Capital Enhancement Programs
    12. 12. <ul><ul><li>Capital Infusion for CFIs (2nd Tranche) </li></ul></ul><ul><ul><ul><li>Developmental Module </li></ul></ul></ul><ul><ul><ul><li>Business Module </li></ul></ul></ul><ul><ul><ul><li>Risk Recovery Program-Types 1 & 2 </li></ul></ul></ul><ul><ul><li>Unsecured Subordinated Debt Facility </li></ul></ul>Capital Enhancement Programs
    13. 13. <ul><ul><li>Other Current Programs/Services </li></ul></ul><ul><li>Clearing Arrangement with CFIs with Negotiable Order of Withdrawal Accounts </li></ul><ul><li>Correspondent Banking Line (under DSWD’s Conditional Cash Transfer Program) </li></ul>
    14. 14. Grassroots Development Program (GDP)
    15. 15. Program Objectives <ul><ul><li>To encourage CFIs and MFIs to expand outreach and extend financial services in areas where there is very limited banking presence or unserved areas, and where small farmers and fisherfolk (SFFs) are not organized. </li></ul></ul>
    16. 16. Program Mechanics <ul><ul><li>Participating CFIs or MFIs shall identify, accredit and lend to grassroots enabling partners, such as agri-business entities and non-government organizations, which will in turn, relend to SFF borrowers for livelihood activities in the hard-to-reach or identified unserved areas of LBP. </li></ul></ul>
    17. 17. LBP GRASSROOTS DEVELOPMENT PROGRAM (Funds Flow) LANDBANK Grassroots Dev’t. Partners (Agribusiness entities, NGOs) Small Farmers & Fisherfolk CFIs & MFIs (Rural Banks, Thrift Banks, Coop Banks, NGOs)
    18. 18. Program Components A. Credit <ul><li>To finance the term-loan working capital of participating CFIs/MFIs for relending to SFFs by participating CFIs/MFIs. </li></ul>B. Technical Assistance <ul><li>To be given as incentive to the participating CFIs/MFIs in the form of trainings, enhancement of MIS database, among others </li></ul>
    19. 19. Program Features & Basic Policies
    20. 20. <ul><ul><li>Accredited in the LANDBANK’s Rediscounting Program </li></ul></ul><ul><ul><li>With CAMELS Rating of 3.0 or better in the last two recent examinations, with no rating below 3 in any of the CAMELS block during the said examination </li></ul></ul><ul><ul><li>With Net Past Due Ratio of not more than 25% </li></ul></ul>Eligibility Criteria for CFIs
    21. 21. <ul><li>With Capital adequacy ratio (CAR) of at least 12%; </li></ul><ul><ul><li>With Portfolio at Risk (PAR) of not more than 10% (for those with microfinance portfolio); </li></ul></ul><ul><ul><li>In current status with satisfactory repayment in all facilities with creditor banks; </li></ul></ul><ul><ul><li>No major BSP findings during the most recent examination </li></ul></ul>Eligibility Criteria for CFIs
    22. 22. Credit Facility Term Loan Purpose Working Capital for Relending Maximum Loan Amount Up to 10% of CFI/MFI’s networth based on its latest audited FS filed with BIR provided the amount is within the CFI/MFI’s borrowing capacity. Lending Policies
    23. 23. Term of Loan Maximum of three (3) years reckoned from the date of release Interest Rate Prevailing interest rate at the time of availment (currently priced at 5.5% p.a.), fixed for the duration of the loan Lending Policies Manner of Loan Release Lump sum based on the masterlist of prospective sub-borrowers submitted by the grassroots enabling partners to CFIs/MFIs
    24. 24. Collaterals/Securities <ul><li>Assignment of CFI/MFI’s Promissory Notes plus underlying collaterals </li></ul><ul><li>Assignment of proceeds of AGFP guarantee for loans extended by Grassroots Enabling Partners to small farmers and fisherfolk, if applicable </li></ul>Lending Policies
    25. 25. Mode of Payment Principal Payments In equal quarterly payments to start at the end of the first quarter from the date of loan release Interest payments In quarterly payments based on remaining outstanding balance Lending Policies
    26. 26. Pre-release Requirements <ul><li>Masterlist of prospective sub-borrowers of grassroots enabling partners. </li></ul><ul><li>Validation of at least 20% of the total promissory notes of the sub-borrowers (aside from the bank’s standard pre-release documents) </li></ul>Lending Policies
    27. 27. CFI Calamity Assistance Progam (CFI-CAP)
    28. 28. Eligible Borrowers <ul><li>CFIs affected by typhoons, disasters and natural calamities as declared by the Provincial Disaster Risk Reduction and Management Council (PDRRMC), National Disaster Risk Reduction and Management Council (NDRRMC), or by the Office of the President. </li></ul>
    29. 29. Eligibility Criteria <ul><li>CFIs with loan portfolio affected by the calamity as validated by LANDBANK Lending Center; </li></ul><ul><li>CFIs with a capital adequacy ratio (CAR) of at least 10% prior to calamity; and </li></ul><ul><li>CFIs with no unrectified/uncorrected serious exceptions and/or irregularities based on the latest BSP examination and those with no arrearages prior to the occurrence of calamity. </li></ul>
    30. 30. Lending Policies Maximum Loanable Amount Ninety percent (90%) of the CFI’s affected portfolio, but not to exceed P5.0 M per CFI, whichever is lower Interest Rate Eight percent (8%) per annum Availability Period Within one year from the date of the declaration of the calamity by the PDRRMC, NDRRMC or OP.
    31. 31. Term of the Loan Up to seven (7) years Repayment Term Quarterly for both principal and interest Loan Security Post Dated Checks Lending Policies
    32. 32. Agricultural Guarantee Fund Pool (AGFP)
    33. 33. To encourage lending institutions to lend to small farmers and fisherfolk by providing guarantee cover on loan portfolio not covered by any collaterals. Program Objectives
    34. 34. Eligible Participating Lending Institutions (PLIs) <ul><ul><li>Banks (e.g. Rural Banks, Cooperative Banks, Thrift Banks) </li></ul></ul><ul><ul><li>Cooperatives </li></ul></ul><ul><ul><li>Small and Medium Enterprises (SMEs) and Large Corporations such as input providers </li></ul></ul><ul><ul><li>Non-Government Organizations and Farmers’ Organizations, other than cooperatives </li></ul></ul>
    35. 35. Eligible Sub-loans that can be guaranteed <ul><li>Loans of small farmers and fisherfolk used for palay and food commodity production </li></ul>
    36. 36. <ul><li>Program Features </li></ul><ul><li>Cover guarantees equivalent to 85% of the principal loan extended by the lending institutions (net of interest and other charges deducted in advance) </li></ul><ul><li>Guarantees all risks except fraud on the part of the conduits </li></ul><ul><li>Quick payment of guarantee claims ( within 15-30 days upon receipt of complete claim documents) </li></ul>
    37. 37. <ul><li>Program Features </li></ul><ul><li>Minimal documentary requirements for guarantee claims </li></ul><ul><li>Loans guaranteed by the AGFP shall carry a risk-weight of 20% (per BSP Circular No. 713) </li></ul>
    38. 38. Claims Procedure <ul><li>80% of claims to be paid within 15 days from application/ submission of claim documents </li></ul><ul><li>Remaining 20% to be paid within 30 days after the conduct of validation. </li></ul>Guarantee Fee <ul><li>2% per annum based on the amount of the loan extended by the PLIs to eligible sub-borrowers </li></ul>
    39. 39. Ang Bangkong May Damdaming Bayan
    40. 40. “ One may walk over the highest mountain one step at a time.”
    41. 41. Thank you

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