A financial credit institution is a person/group of persons or financial institutions who/that provide credits for purposes related to agricultural, aquaculture, or fishing operations. This includes banks (commercial, government, and/or cooperative banks), microfinance institutions, individual money lenders, self-help groups, among others. These individuals/institutions are bound by terms and conditions, such as when the farmer or fisherman defaults on the term of the loan, a form of collateral may be sold, and the proceeds may be used to pay off the loan.

 

Below are the definitions of each kind of financial credit institution. 

 

1. Commercial Bank/Rural Bank (e.g., Bank of Commerce) – A commercial bank is a formal type of financial institution and intermediary. It is a bank that provides transactional savings and money market accounts and accepts time deposits. A rural bank is a more popular type of bank in rural communities. Its role is to promote and expand the rural economy in an orderly and effective manner, by providing people with basic financial services. It helps farmers through various stages of production, from buying seedlings to marketing their produce. Rural banks are privately-owned and -managed. It has the power to provide credit facilities to farmers, fishermen and/or merchants or to cooperatives of such farmers, fishermen and/or merchants, and in general, to the people of the rural communities where the rural bank operates. 

 

2. Government Bank (e.g., Land Bank of the Philippines) – A bank owned by the Philippine government. These banks are the Land Bank of the Philippines, Development Bank of the Philippines, and Al-Amanah Islamic Investment Bank of the Philippines. 

 

3. Cooperative Bank (e.g., Agribusiness Rural Bank, Inc.) – Similar to a rural bank with respect to its services. The two are differentiated from each other by form and ownership. A cooperative bank is organized/owned by cooperatives or a federation of cooperatives. Rural banks, on the other hand, are organized in the form of stock by corporations, associations, and cooperatives. 

 

4. Microfinance Institution (e.g., Pag-asa Philippines Lending Inc.) – An institution that provides a broad range of financial services such as deposits, loans, payment services, money transfers, and insurance products to the poor and low-income households and their microenterprises. Such institutions are usually established by private corporations, foundations, religious organizations, and NGOs to help alleviate poverty through capability building, people empowerment, and rural development. Examples are the Center for Agriculture and Rural Development, Incorporated (Card, Inc.), Ikabuhi Microfinance Program (IMP), HMF Financial Services, Private Limited (HELP), Asia and Africa International (ASA), Ahon sa Hirap, Incorporated (ASHI); Negros Women for Tomorrow Foundation, Incorporated (NWTF); and Serviamus Foundation, Incorporated. Also included in this category is the Quedan and Rural Credit Guarantee Corporation (QuedanCor), a government financing institution under the Department of Agriculture (DA).

 

5. Individual Money Lender (e.g., 5-6) – A person who offers small personal loans at high rate of interest, usually higher than the market rate charged on credit cards or bank overdrafts. Money lenders are Financial Credit Institution Definition important source of credit to a category of borrowers who would normally be refused credit by most financial institutions because their income may be at or below the poverty threshold. Also included in this category are money lenders who are residents of other barangays, provided that the borrower is residing within the barangay. 

 

6. Self-help Group (e.g., Caritas Philippines) - A village-based financial intermediary, usually composed of 10 to 20 members. Members make small regular savings contributions over a few months until there is enough capital in the group to begin lending. Funds may then be lent back to the members or to other residents in the village for any purpose. 

 

7. Others refer to other financial credit institutions not mentioned above.