Landbank opens lending window for rural banks

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MANILA, Philippines — Rural banks hoping to expand their electronic channels can get a loan from the state-run Land Bank of the Philippines through a billion-peso credit facility specifically for digitalization .

Landbank announced yesterday that it had opened a loan program with funding of 1 billion pesos that rural financial institutions (CFIs) could tap into for their digital transition.

Called Digitization of CFIs (DIGI-CFI), the program aims to finance digitalization efforts undertaken by banks serving remote areas.

Landbank President and CEO Cecilia Borromeo said rural banks could get a loan through the line of credit to pay license or subscription fees for commercial software. In addition, they can access the DIGI-CFI to cover the outsourcing of IT systems.

Borromeo also said the program could finance the acquisition of hardware and the purchase of software for upgrading a CFI’s digital platform. Rural banks can apply for financial support to maintain the applications and systems they install.

Under DIGI-CFI, rural banks, including cooperatives and savings, can borrow up to 80% of the project cost of their digitization programme.

Term loans will bear an interest rate of five percent per annum, fixed for the first year and subject to review thereafter, and must be paid by the borrower within five years.

For short-term loans, the interest rate will be based on Landbank’s applicable benchmark rate and borrowers have up to one year to pay principal plus interest.

“Landbank aims to strengthen the capacity of rural banks to contribute to the digitalization wave. The opportunities for growth are endless, with the goal of promoting financial inclusion and providing innovative and responsive digital financial services,” said Borromeo.

Landbank extended 9.66 billion pesos in loans to at least 88 CFIs in April, funding various efforts to advance financial inclusion and foster rural development.

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