one example is the system established by the government of the Philippines in
which low-interest loans are financed by a low interest rate paid on deposits
(World Bank 1987). Charging below-market interest rates generates excess demand
for credit, and as a result bank operations have often been governed by
rules for the selective allocation of credit; the Masagna-99 program that targeted
rice farmers in the Philippines is a case in point. More generally, Filipino
banks were required to allocate 25 percent of all loans to the agricultural sector,
and the government has also limited their flexibility to set interest rates
and lend according to private profitability. Foreign and private banks in India
have also faced restrictions on the extent of their lending activity (India, Government
of 1991)