MANILA - A bill that seeks to amend the century-old Warehouse Receipts Law will allow farmers easier access to credit, two proponents of the bill said on Monday.
A common problem of many farmers is that banks often won't allow them to use their warehoused harvest as collateral for loans, said financial inclusion specialist Gay Santos.
While warehouses issue receipts to farmers for storing their crops, there is no way for the bank to verify if the warehouse receipt issued really matches the quantity and quality of the goods in the warehouse.
"What the banks are looking for is something that they can have the confidence to accept as collateral," Santos said in an interview with ANC.
Romuald Padilla, a director at the Securities and Exchange Commission, said one of the problems with the existing law is that it was formulated way back in 1912.
Padilla said the law needs to be amended to take advantage of advances in technology that allow for a central registry of warehouses, as well as the creation of an accreditation council for people who run warehouses to ensure professionalism.
This will ensure that all warehouse receipts issued are valid and went through "meticulous evaluation."
The proposed measure will make banks more amenable to accepting farmers’ warehouse receipts as collateral because of the transparent framework for issuing and trading warehouse receipts, the proponents said.