Addressing CARP's imposition of ten-year holding period through group lending micro financing credit model

• Main Author: Lim, Emma Malou U.
• Format: text
• Language: English
• Published: Animo Repository 2010
• Subjects: Microfinance; Credit; Loans; Corporate Finance
• Online Access: https://animorepository.dlsu.edu.ph/etd_masteral/5878; https://animorepository.dlsu.edu.ph/context/etd_masteral/article/12755/viewcontent/CDTG004713_F_Partial.pdf
• Institution: De La Salle University

The Comprehensive Agrarian Reform Law (CARL) or Republic Act No. 6657 (RA 6657) was enacted to pursue a Comprehensive Agrarian Reform Program (CARP) to promote social justice, rural development and improvement in the quality of life of the farmers. CARP has a dual purpose, the acquisition and distribution of land and the provision of support services. To achieve this dual purpose, there must be sufficient funds from the governmen. However, there is a general lack of funds available to provide for support services for the Agrarian Reform Beneficiaries (ARBs). Farmers are not in a position to finance the high cost of farm production. There are several credit facilities existing that can possibly be a source of credit to ARBs. However, these credit facilities either cannot or are not willing to serve the demands for credit and loans of the ARBs. Bulk of the credit needs of the farmers is, thus, sourced from informal lenders. ARBs have in their ownership and possession agricultural land. However, CARL imposes a restriction on the sale and transferability of the agricultural land. This is the 10-year holding period that prohibits ARBs from selling, transferring or conveying their farmland within a period of 10 years. Because of the restriction and the fact that most poor people have little or no physical collateral to offer, this paper seeks to examine the viability of the group lending micro financing model as a means of addressing the need for credit by the poor, taking into consideration the features of this model and how it can be adjusted to cater to the needs and the capabilities of the ARBs.