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General Banking Law

General Banking Law

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Published by: Kristina Kris on Aug 01, 2011
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07/07/2014

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GENERAL BANKING LAW

RA 8791

Classification of Banks
Section 3. 3.2. Banks shall be classified into: (a) Universal banks; (b) Commercial banks; (c) Thrift banks; (d) Rural banks; (e) Cooperative banks; (f) Islamic banks; and (g) Other classifications of banks as determined by the Monetary Board of the Bangko Sentral ng Pilipinas. CUT-RICO

) exercise all the powers specified in Sec. and convey real estate. it can: a.) provide the other banking services.) invest in the equities of allied enterprises . b.) purchase. d. and c.COMMERCIAL BANK Apart from its general powers as a stock corporation. hold. 29.

) receiving deposits. . discounting and negotiating promissory notes. bills of exchange. drafts.) accepts or creates demand deposits subject to withdrawal by check and primarily organized to carry on the business of accepting drafts and issuing letters of credit. b. all such powers as may be necessary to carry on the business of commercial banking the following: a. and other evidences of debts. in addition to the general powers incident to corporations.Section 29 A commercial bank shall have.

-Act as financial agent and buy and sell.) buying and selling foreign exchange and gold or silver bullion. evidences of indebtedness and all types of securities. shares.  OTHER BANKING SERVICES -Receive in custody funds. and lending money against personal security or against securities consisting of personal property or mortgages on improved real estate and the insured improvements thereon. . documents and valuable objects.c. by order of and for the account of their customers.

adviser. act as managing agent. -Upon prior approval of the Monetary Board. and -Rent out safety deposit boxes. .-Make collections and payments for the account of others and perform such other services for their customers as are not incompatible with banking business. consultant or administrator of investment management/advisory/consultancy accounts.

LIMITATION The individual borrower can borrow a credit not exceeding 15% of the unimpaired capital and surplus of such bank. warehouse receipts or other similar documents transferring or . It can be increased to another 15% provided the additional liabilities are adequately secured by shipping documents.

non-perishable staples. and must have a market value equal to at least 125% of such additional liabilities. which staples must be fully covered by insurance.securing title covering readily marketable. .

It CANNOT perform those functions both directly AND indirectly. as well as applicable regulations of SEC.UNIVERSAL BANKS In addition to the powers of a commercial bank. the underwriting of equity securities and securities dealing will be subject to pertinent laws. a universal bank can exercise the powers of an investment house either DIRECTLY (through a separate and distinct department or unit within the bank) or INDIRECTLY (through a separate subsidiary investment house). . In either case.

namely: 1. 2.) private development bank .) stock savings and loan associations. and 3.) savings and mortgage banks.THRIFT BANKS A thrift bank is divided into 3 different classes.

a. together with the other funds in its possession. . Savings and Mortgage Banks It is a corporation organized for the purpose of accumulating the savings of small depositors and make them available to the borrower.

instrumentalities or corporations: Provided. for loans and/or for investment in the securities of productive enterprises or in securities of the Government. or any of its political subdivisions.b. and using such accumulations. together with its capital in the case of a stock corporation. . That they shall be primarily engaged in servicing the needs of households by providing personal finance and long-term financing for home building and development. Stock savings and loan associations Any corporation engaged in the business for accumulating the savings of its members or stockholders.

Designed to supplement the short-term credits of the rural banks. they are classified as mortgage banks and are able to accept only savings and time deposits.c. . Private Development Bank A group of quasi-private development banks promoted by the Development Bank of the Philippines to provide medium and long term credits to both the agricultural and industrial sectors.

. or to cooperatives of such farmers or merchants at reasonable terms and in general. to the people of the rural community.RURAL BANKS These are governmentsponsored/assisted banks which are privately managed and largely privately owned that provide credit facilities to farmers and merchants.

b. c. a rural bank can provide the following services: a.) act as trustee over estates or properties of farmers or merchants.) accept Negotiable Order of Withdrawal (NOW) accounts.If authorized by the Monetary Board. .) accept current or checking accounts. provided that such rural bank has net assets of at least 5 Million Pesos.

and f.d. city or provincial funds in the municipality.) act as official depository of municipal. e. city.) sell domestic drafts.) invest in allied undertakings . or province where it is located.

Any zakat or "ithe" paid by the Islamic Bank on behalf of its shareholders and depositors shall be its obligation to appropriate said zakat fund and to disburse it in legitimate channels to be ascertained first by the Shari'a Advisory Council. .ISLAMIC BANKS REPUBLIC ACT 6848 All business dealings and activities of the Islamic Bank shall be subject to the basic principles and rulings of Islamic Shari'a within the purview of the aforementioned declared policy.

namely owned by the National Government. GSIS. the SSS. DBP and the Privatization and Management Office.« that there is only one Islamic Bank in the Philippines? The Bangko Sentral recognizes only one bank. .

.COOPERATIVE BANKS Organized primarily to provide financial and credit services to cooperatives. It may perform any or all of the services offered by a rural bank.

as it may deem proper. as ´Specialized and unique government banksµ subject to the supervision and regulation of Bangko Sentral. . though not under the new law. Development Bank of the Philippines and the Land Bank of the Philippines are classified.OTHER BANKS The Monetary Bank is authorized to make other classifications of banks. i.e.

9474 Enacted: May 22. 2007 a non-bank financial institution authorized by the BSP to engage in quasibanking functions and to borrow funds from more than nineteen (19) lenders through the issuance.What is a quasi bank? REPUBLIC ACT NO. endorsement or assignment with recourse or acceptance of deposit substitutes .

through the issuance. That commercial. for the borrower's own account. . for purposes of relending or purchasing of receivables and other obligations: Provided.Sec. certificates of assignment. or through the issuance of participation·s. however. trust certificates. 2-D (b) of PD 71 (1972) 2Quasi-Banking Functions shall mean borrowing funds. from twenty or more lenders at any one time. or of repurchase agreements. or similar instruments with recourse. endorsement or acceptance of debt instruments of any kind other than deposits. which borrow funds through any of these means for the limited purpose of financing their own needs or the needs of their agents or dealers. shall not be considered as performing quasi-banking functions. and other non-financial companies. industrial.

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