Big borrower, big credit controls.

Isn’t this logical?

In fact, it’s plain common sense to us.

It’s a basic banking tenet: Lend against security,

Rich individuals or parties which borrow huge funds from state banks and other financial institutions should be imposed higher loan requirements or conditions before their credit applications are approved.     

The only problem is that sometimes, big borrower is also big-time chummy with the loan-approving people who approve credit accommodation.

And so a lawmaker is proposing that  private corporations and their wealthy owners – crony or not — be barred from dipping their hands into the loan portfolio of state banks to avoid a repeat of the alleged P660-million behest loan granted by Development Bank of the Philippines to former Marcos Trade minister Roberto Ongpin.

Sen. Ralph G. Recto said there would still be behest loans that could be obtained in the near future from state-owned banks like the DBP and the Land Bank of the Philippines unless a policy reform is adopted by state banking regulators.

“Loan money from these state-owned banks would have better use if placed in an exclusive credit window for the agriculture sector and SMEs (small-medium enterprises),” Recto, Senate ways and means chairman and senior member of the Congressional Oversight Committee on Agriculture and Fisheries Modernization, said.

He said  DBP and LandBank should be barred from extending loans to big corporate clients and instead be mandated to facilitate easy loan downloads for growing segments of the agriculture, fisheries, and the SME sectors.

The senator pointed out big corporate clients could always turn to their preferred private commercial banks for credit or additional capital as a consequence of the “loan blockade”.

Recto stressed that this was really among the mandates of the DBP and LBP, which was to offer cheap loans to farmers, fisherfolks, and small entrepreneurs but have not been fully implemented.

“If we put up a loan blockade on big corporate players or at least put a cap on how much state banks could lend to them, we would be seeing the last of behest loans that take away so much loan money that should have been channeled to growing sectors,” he said.

The senator said if an overhaul of the charters of DBP and LandBank would be necessary to firm up his proposal, he would be willing to put together a Senate bill.

Ongpin appeared before a Senate investigating committee Monday to deny that his closeness to former first gentleman Mike Arroyo clinched for him the controversial DBP loans he used to buy mining shares.

He applied for two loans from DBP. The first, for P150 million, was granted in May 2009 and the second, for P510 million, six months later. Both were allegedly approved with uncommon dispatch.

The former Trade chief used these to purchase 50 million shares from Philex Mining Corp., the country’s largest gold and copper mining firm.