integrated rural financing program (irf) - rhennel

7/26/2019 Integrated Rural Financing Program (Irf) - Rhennel

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INTEGRATED RURAL FINANCING

PROGRAM (IRF)

Presented by:

RHENNEL P. DEQUIAMPA Student

Presented to:

NORMA L. RAGUINE, DPAProfessor, Urbn ! De"e#o$%ent

Ramon Magsaysay Technological University

Iba, Zambales


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Inte&rted Rur# '(nn)(n& *IR'+ Pro&r% - Introduced as a pilot financing project in1983, IRF uses the )red(t#(ne $$ro)-to financing smallholder agriculture. It is jointlymanaged by the griculture !redit "olicy !ouncil #!"!$ and the %and &an' of the"hilippines and has t(o distinct features)

(1) a comprehensive credit-line type of financing open to rural banks

and cooperatives through the Land Banks rediscounting window;

and

() an institutional-development component focused on organi!ingand strengthening small farmers groups"

#he latter component is implemented through $%&s" #he farmers are

trained in basic enterprise management and bookkeeping skills and'

more important' value formation' prior to actual availment of bank credit"

I*+R+ R/R% FI**!I* "R0R #IRF$


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#he * is sponsored by the LB+' , and .+." t provides financing through rural

financial institutions to enhance the production income and repayment capacity of

organi!ed small farmers and fishers" /ligible conduits for this program are ruralfinancial institutions such as rural banks' cooperative rural banks' private

development banks' and cooperatives while end-borrowers are small farmers and

fishermen"

+he IRF2s objecties are as follo(s)

(1) to support multiple and diversified farming systems and integrated farm

financing to spread risks in lending;

() to encourage development of viable small home or rural industries linked to

the main livelihood of the community or farm household; and

(0) to simplify and systemati!e the lending process between banks and

borrowers"



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Follo(ing the transfer of superision of IRF from !entral &an' to %and &an' in

1989, some changes (ere made. Instead of the old strategy of granting special

time deposits #4+s$ to rural financial institutions #RFIs$, the modified IRF uses

the %and &an'2s rediscounting (indo( to proide loans. +his means that the rural

ban's and cooperaties hae to originate promissory notes (hich they then

rediscount (ith the %and &an'. +he old approach placed 4+s at the disposal of

the ban's (hich they in turn lent to small borro(ers. nother significantmodification in the IRF is the institution-building component. Farmers are

organi5ed into groups and cooperaties in order to facilitate credit deliery by the

%and &an'. 6hile the old IRF lent to indiidual farmer-borro(ers, the modified IRF

recogni5es the role of *0s in preparing and training farmers in credit

management and uses group lending as a strategy to delier credit to farmers.



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recent ealuation done by the !"! #1997$ reealed that the rural

financial institutions #RFIs$ participating in the IRF increased their clientoutreach as eidenced by a significant gro(th in the number of agricultural

borro(ers. lso, compared to other lending schemes, IRF lending is more

cost-effectie.

summary report of the program as of end 1991 follo(s)- lent a total of " I .8 billion since the ne( program started

- approed a total of almost " I. billion in credit lines

- sered 119,:; farmer beneficiaries through 33< RFIs and

- consistently e=hibited a near 1


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0ther obseration made are %&"2s loan portfolio targets hae largely

influenced program performance and led to proision of loans tocooperaties that do not hae ade>uate social and institutional preparation.

+he institutional-building component has no policy for graduation of

cooperaties and lac's standardi5ed tool for assessing training needs of

cooperaties and measuring the impact of cooperatie training. +he

monitoring system is heaily oriented to(ard outreach and loandisbursements, paying ery little attention to performance indicators of

potential operational and structural problems.



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+he oerall program performance sho(s that IRF (as able to reach poorrural households. %oan repayment rate (as high at the start of the program

but (as not sustained oer time. 0erall saings-to-loans outstanding ratio

is lo(, reflecting poor deposit mobili5ation efforts among cooperaties. ost

cooperaties e=hibit either mediocre or lo(-leel financial performance. +he

cost of implementation has been on the lo( side, not(ithstanding its

nation(ide coerage. +he sustainability of IRF loan funds cannot be

determined haing been mi=ed (ith other %&" funds.



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+he study suggested the follo(ing to improe the program)

1. Reie( the program objecties7. nsure loan repayment by haing 5ero tolerance for loan

delin>uency

3. Reise the monitoring system

:. efine the policy frame(or' for graduation of cooperaties. eelop standard tools for assessing the training needs of

cooperaties

;. eelop and promote saings and loan products that are suitable to

client needs and preferences



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?. Reie( current administratie superision by %&"

8. +ap e=perienced serice proiders in ie( of limited capacity of currentserice proiders, or build the latter2s capacity through an incentie system

9. !onduct an internal reie( of staff caseloads

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integrated rural financing program (irf) - rhennel

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