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Rural Banks

a rural bank is a financial institution that helps rationalize the

developing regions or developing country to finance their needs specially the
projects regarding agricultural progress.
Function of Rural Banks
A rural bank may offer or perform any or all of the following services:
1) Grant loans and make investments in accordance with existing rules and
2) Accept savings and time deposits.
3) Sell domestic drafts.
4) Act as correspondent for other financial institutions.
5) Receive in custody funds, documents, and other valuable objects, and rent
safety deposit boxes for the safeguarding of such objects.
6) Act as financial agent, buy and sell, by order of and for the account of its
customers, shares, evidences of indebtedness and all types of securities.
7) Make collections and payments for the account of others and perform
such other services for its customers as are not incompatible with banking
Organizational Structure
The Organizational Structure for RRB's varies from branch to branch and
depends upon the nature and size of business done by the branch. The Head
Office of an RRB normally had three to seven departments.
The following is the decision making hierarchy of officials in a Regional Rural
Board of Directors
Chairman & Managing Director
General Manager
Chief Manager/Regional Managers
Senior Manager
Officer / Assist
Types of Loan
1. Agricultural Loans Farm expense, Purchase of seeds, Purchase of
animals, Minor repairs & Payments of current taxes and irrigation fees.
2. Commercial Loans Developing or improving commercial operations
as well as purchasing commodities for resale which is considered
necessities or semi by consumers.

3. Industrial Loans Marketing goods, Purchase or raw material,

Expenses for labor
4. Term Loans Purchase of Farm land, Improvement of agricultural,
commercial, industrial, or residential real estate for the borrowers own
use and not for speculation , acquition , purchase of equipment and
materials, production and harvesting of agricultural crops.
5. Loan to Cooperatives Agricultural loans, Commercial loans,
Industrial loans
Special Financing Programs
Rural banks have been allowed to participate in special financing programs
for agricultural production where the established funds are placed under the
administration of the Bangko Sentral. Special financing programs allowed:
1. Bangko Sentral International bank for Reservation and Development
2. Small Fishermens Special Credit Fund
3. Coconut Financing Program
4. Industrial and Guarantee Loan Fund Program
5. Livestock and Poultry Financing
6. Rice Production Program
7. Masaganang Maisan and Maisagana Programs
8. Gulayan sa Kalusugan
9. Financing Program for Fisheries Production and Development
Deposit Operations
Types of deposits accepted by a rural bank:
1. Demand deposit
2. Savings deposit
3. Time deposit
4. NOW Account
Borrowing Operations
1. Rediscounting
2. Direct Borrowing
Equity Invesstments
Non financial undertakings which have been declared by the Bangko Sentral
as possible fields of investments by a rural bank are as follows;
1. Warehousing companies
2. Companies processing facilities for agricultural crops such as rice and
3. Companies providing drying facilities for agricultural crops such as rice
and corn.
4. Insurance agencies

5. Safe deposit companies

6. Companies engaged exclusively in facilitating the marketing existing
agricultural products.