Monday, October 26, 2009 | MANILA, PHILIPPINES [ BusinessWorld Online ]
CREDIT ACTIVITY in the countryside is expected to pick up once a bill that will ease up the process of securing land titles is passed into law, the Chamber of Thrift Banks (CTB) said.
Pascual M. Garcia III, CTB president, said there are currently 11 million parcels of land without titles, most of which are located in the countryside.
A law that allows faster and a more efficient way of securing land titles would help spur lending in the countryside since landowners may use land titles as collateral for bank loans.
Currently, those who do not have land titles do not have access to funding from banks.
"There’s going to be more flow of credit in the countryside if this is signed into law. There will be increased economic activity," Mr. Garcia said at the sidelines of the CTB’s general membership meeting on Friday.
"This is one of the laws that will have a direct impact on the agricultural sector directly."
Senate Bill No. 3429 and House Bill No. 5618, also known as the free patent bills, will amend Commonwealth Act No. 141 or the Public Land Act.
When signed into law, those residing or cultivating public lands not exceeding three hectares for at least 10 years will be given free patents or land titles.
The House version of the bill was forwarded to the Senate in January. The Senate bill is still awaiting third reading approval.
Meanwhile, Mr. Garcia reiterated the CTB’s oppposition to the removal of the alternative compliance provision of Presidential Decree 717, which requires banks to set aside 25% of their lending funds to the agriculture and agrarian reform sectors.
Banks may also comply through subscription to the debt notes of state-run Development Bank of the Philippines and Land Bank of the Philippines, loans to infrastructure projects, provision of wholesale lending to rural financial institutions, among others.
A bill in Congress, however, will no longer allow lending to development sectors as alternative compliance.
"I would like to stress that we are not proposing the retention of alternative compliance mechanism because we are trying to avoid the penalty. We are just concerned about the possible impact to these entities," Mr. Garcia said. — Gerard S. dela Peña
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