integrated rural financing program (irf) - rhennel
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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"
I*+R+ R/R% FI**!I* "R0R #IRF$
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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$, the modified IRF uses
the %and &an'2s rediscounting (indo( to proide loans. +his means that the rural
ban's and cooperaties hae to originate promissory notes (hich they then
rediscount (ith the %and &an'. +he old approach placed 4+s at the disposal of
the ban's (hich they in turn lent to small borro(ers. nother significantmodification in the IRF is the institution-building component. Farmers are
organi5ed into groups and cooperaties in order to facilitate credit deliery by the
%and &an'. 6hile the old IRF lent to indiidual farmer-borro(ers, the modified IRF
recogni5es the role of *0s in preparing and training farmers in credit
management and uses group lending as a strategy to delier credit to farmers.
I*+R+ R/R% FI**!I* "R0R #IRF$
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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.
I*+R+ R/R% FI**!I* "R0R #IRF$
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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
I*+R+ R/R% FI**!I* "R0R #IRF$
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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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