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MATRIX:

DIFFERENT TYPES OF BANKS IN THE PHILIPPINES


 UNIVERSAL BANKS
 COMMERCIAL BANKS
 THRIFT BANKS
 RURAL BANKS
 COOPERATIVE BANKS
 ISLAMIC BANKS

Submitted by:
ALLEN JOY A. TACTAY

Submitted to:
Atty. Mendoza

Date Submitted:
February 24, 2017
UNIVERSAL BANK COMMERCIAL BANK THRIFT BANK RURAL BANK COOPERATIVE BANK ISLAMIC BANK
I. GOVERNING LAW R.A. 8791 R.A. 8791 (GENERAL R.A. 7906 (Thrift Republic Act No. 7353 Republic Act No 9520 Republic Act No.
(GENERAL BANKING LAW) Banks Act); General (Rural Banks Act); (Cooperative 6848, (Charter of Al
BANKING LAW) Banking Law (RA General Banking Law Code OF 2008); General Amanah Islamic
8791) (RA 8791) Banking Law (RA 8791) Investment Bank of
the Philippines;
General Banking Law
(RA 8791)
II. LEGAL DEFINITION No definition under RA No.
8791
Islamic Bank means
Old definition
the bank created
The following terms shall be
under this Act;
held to be synonymous and
Cooperative Bank is Thrift banks shall include
interchangeable
No legal definition of a one organized for the savings and mortgage Islamic banking
Rural bank in primary purpose of banks, private business means
No definition under (a) "Commercial bank"
Republic Act No. 7353 providing a wide development banks, and banking business
RA No. 8791 and "commercial banking
(hereafter the "Rural range of financial stock savings and loans whose aims and
corporation;
Banks Act") services to associations organized operations do not
cooperatives and under existing laws3 involve interest (riba)
A commercial banking
their members2 which is prohibited by
corporation shall be any
the Islamic Shari'a
corporation which accepts
principles4
or creates demand deposits
subject to withdrawal by
check. 1
III. CAPITALIZATION Head Office Only Head Office Only Head Office in ERBs and Coop Banks Head Office in NCR One billion pesos
 P3 billion  P2.00 billion National Capital Head Office in NCR (P1,000,000,000)
Region (NCR) Head Office Only divided into ten
Up to 10 branches Up to 10 branches Head Office Only  P50 million million par value
 P6 billion  P 4 .00 billion Head Office Only  P50 million shares of One
 P500 million Up to 10 branches hundred pesos each.6
11 to 100 branches 11 to 100 branches Up to 10 branches  P75 million
 P15 billion  P10.00 billion Up to 10 branches  P75 million

1
Sec. 20.RA 337, The General Banking Act
2
Art. 23 (i), RA 9520, Philippine Cooperative Code of 2008
3
Sec. 3 (a), RA No. 7906, Thrift Banks Act of 1995
4
Sec. 44,(1), (2) RA No. 6848, The Charter of the Al-Amanah Islamic Investment Bank of the Philippines
6
Section 7, Republic Act 6848, 1990
 P750 million 11 to 50 branches
More than 100 More than 100 branches 11 to 50 branches  P 100 million
branches  P15.00 billion 11 to 50 branches  P 100 million
 P20 billion  P1.00 billion More than 50 branches
More than 50 P200 million
More than 50 branches branches
 P2.00 billion  P200 million Head Office in All Other
Areas Outside NCR (All
Head Office in all Head Office in All Cities up to 3rd class
Other Areas Outside Other Areas Outside municipalities)
NCR NCR (All Cities up to
3rd class Head Office Only
Head Office Only municipalities)  P20 million
 P200 million
Head Office Only Up to 10 branches
Up to 10 branches  P20 million  P30 million
 P300 million
Up to 10 branches 11 to 50 branches
11 to 50 branches  P30 million  P40 million
 P400 million
11 to 50 branches More than 50 branches
More than 50 branches  P40 million P80 million
 P800 million
More than 50 Head Office in All Other
branches Areas Outside NCR (4th
 P80 million class to 6th class
municipalities)
Head Office in All
Other Areas Outside Head Office Only
NCR (4th class to 6th  P10 million
class municipalities)
Up to 10 branches
Head Office Only  P15 million
 P10 million
11 to 50 branches
Up to 10 branches  P20 million
 P15 million
More than 50 branches
11 to 50 branches  P40 million5
 P20 million

More than 50
branches
 P40 million

IV. PURPOSE To provide the To carry out the commercial To Accumulate the To finance normal To provide financial, To promote and
widest variety of banking8 savings of depositors credit needs of banking and credit accelerate the socio-
financial services and investing them, farmers, fishermen or services to cooperatives economic
which among together with capital farm families as well and their members , development of the
others include the loans secured by as cooperatives, although it may provide Autonomous Region
commercial and bonds, mortgages in merchants and the same services to non- by performing
investment house real estate and private and public members11 banking, financing and
services7 insured improvements employees10 investment operations
thereon, chattel A cooperative may be and to establish and
mortgage, bonds and organized and registered participate in
other forms of for any or all of the agricultural,
security or in loans for following purposes: commercial and
personal or household industrial ventures
finance, whether 1. To encourage thrift and based on the Islamic
secured or unsecured, savings mobilization concept of banking13
or in financing for among the members;
homebuilding and 2. To generate funds and
home development extend credit to the
among others9 members for
productive and
provident purposes;
3. To encourage among
members systematic
production and

5
BSP CIRCULAR NO. 854, Series of 2014
7
Section X101. Classifications and Powers of Banks, Manual of Regulations for Banks. 2015.
8
Id.
9
RA 7906 Section 3.
10
Section X101. Classifications and Powers of Banks, Manual of Regulations for Banks. 2015.
11
Id.
13
RA 9848, Section 3.
marketing;
4. To provide goods and
services and other
requirements to the
members;
5. To develop expertise
and skills among its
members;
6. To acquire lands and
provide housing
benefits for the
members;
7. To insure against losses
of the members;
8. To promote and
advance the economic,
social and educational
status of the members;
9. To establish, own, lease
or operate cooperative
banks, cooperative
wholesale and retail
complexes, insurance
and
agricultural/industrial
processing enterprises,
and public markets;
10. To coordinate and
facilitate the activities
of cooperatives;
11. To advocate for the
cause of the
cooperative
movements;
12. To ensure the viability
of cooperatives
through the utilization
of new technologies;
13. To encourage and
promote self-help or
self-employment as an
engine for economic
growth and poverty
alleviation; and
14. To undertake any and
all other activities for
the effective and
efficient
implementation of the
provisions of this
12
Code.
V. POWERS The authority to  The general powers a. Grant loans and 1. To the exclusive a) Accept savings and 1. To prescribe its by-
exercise, in addition incident to make use of its time deposits; laws and its
to the powers corporations, investments in registered name, b) Open current or operating policies;
authorized for a  all such powers as may accordance with to sue and be checking accounts: 2. To adopt, alter and
commercial bank in be necessary to carry on existing rules and sued; Provided, That the use a corporate seal;
Section 29, the the business of regulations. 2. Right of thrift bank has net 3. To make contracts,
powers of an commercial banking, b. Accept savings succession; assets of at least to sue and be sued;
investment house such as: and time 3. To amend its Twenty million pesos 4. To borrow money;
as provided in deposits. articles of P20,000,000 subject to own real or
existing laws and i. accepting drafts and c. Sell domestic cooperation in to such guidelines as personal property
the power to invest issuing letters of drafts. accordance with may be established and to introduce
in non-allied credit; d. Act as the provisions of by the Monetary improvements
enterprises as ii. discounting and correspondent the Cooperative Board; and shall be thereon, and to sell
provided in this negotiating promissory for other financial Code; allowed to directly mortgage or
Act.14 notes, drafts, bills of institutions. 4. To adopt bylaws clear its demand otherwise dispose
exchange, and other e. Receive in not contrary to deposit operations of the same;
evidences of debt; custody funds, law, morals or with the Bangko 5. To employ such
iii. accepting or creating documents, and public policy, and Sentral and the officers and
demand deposits; other valuable to amend and Philippine Clearing personnel,
iv. receiving other types objects, and rent repeal the same House Corporation; preferably from the
of deposits and safety deposit in accordance c) Act as correspondent qualified Muslim
deposit substitutes; boxes for the with the for other financial sector, as may be
v. buying and selling safeguarding of Cooperative institutions; necessary to carry
foreign exchange and such objects. Code; d) Act as collection Islamic banking
gold or silver bullion; f. Act as financial 5. To purchase, agent for business;
acquiring marketable agent, buy and receive, take or government entities, 6.To establish

12
Article 6 of RA 9520
14
Section 23, General Banking Law
bonds and other debt sell, by order of grant, hold, including but not branches, agencies
securities; and and for the convey, sell, limited to, the Bureau and correspondent
vi. Extending credit, account of its lease, pledge, of Internal Revenue, offices in provinces
subject to such rules as customers, mortgage, and Social Security and cities in the
the Monetary Board shares, evidences otherwise deal System, and the Philippines,
may promulgate.15 of indebtedness with such real Bureau of Customs; particularly where
and all types of and personal e) Act as official Muslims are
- These rules may include securities. property as the depository of predominantly
the determination g. Make collections transaction of the national agencies and located, or in other
of bonds and other debt and payments for lawful affairs of of municipal, city or areas in the country
securities eligible for the account of the cooperative provincial funds in or abroad as may be
investment, the maturities others and may reasonably the municipality, city necessary to carry
and aggregate perform such and necessarily or province where on its Islamic
amount of such investment. other services for require, subject the thrift bank is banking business,
its customers as to the limitations located, subject to subject to the rules
are not prescribed by law such guidelines as and regulations of
incompatible and the may be established the BSP;
with banking Constitution; by the Monetary 7. To perform the
business. 6. To enter into Board; following banking
division, merger f) Rediscount paper services:
or consolidation, with the Philippine a. Open current or
as provided in the National Bank, the checking
Cooperative Land Bank of the accounts;
Code; Philippines, the b. Open savings
7. To form Development Bank of accounts for
subsidiary the Philippines, and safekeeping or
cooperatives and other government custody with no
join federations owned or -controlled participation in
or unions, as corporations. Said profit and losses
provided in the institutions shall unless otherwise
Cooperative specify the nature of authorized by the
Code; paper deemed account holders to
8. To avail of loans, acceptable for be invested;
be entitled to rediscount, as well as c. Accept
credit and to rediscounting rate to investment
accept and be charged by any of account
receive grants, these institutions; placements and
donations and and invest the same

15
Section 29, General Banking Law
assistance from g) Issue mortgage and for a term with
foreign and chattel mortgage the IB’s funds in
domestic sources, certificates, buy and Islamically
subject to the sell them for its own permissible
conditions of said account or for the transactions on
loans, credits, account of others, or participation
grants, donations accept and receive basis;
or assistance that them in payment or d. Accept foreign
will not as amortization of its currency deposits
undermine the loan. from banks,
autonomy of the companies,
cooperative. The Such mortgage and organizations and
Authority, upon chattel mortgage individuals,
written request, certificates shall be issued including foreign
shall provide exclusively in national governments;
necessary currency and exclusively e. Buy and sell
assistance in the for the financing of foreign exchange;
documentary equipment loans, f. Act as
requirements for mortgage loans for the correspondent of
the loans, credit, acquisition of machinery banks and
grants, donations and other fixed institutions to
and other installations, handle
financial support; conservation, remittances or any
9. To avail of enlargement or fund transfers;
preferential rights improvement of g. Accept drafts and
granted to productive properties and issue letters of
cooperatives real estate mortgage credit or letters of
under Republic loans for: guarantee,
Act No. 7160, negotiable notes
otherwise known (1) the construction, and bills of
as the Local acquisition, expansion or exchange and
Government improvement of rural and other evidence of
Code, and other urban properties; indebtedness
laws, particularly under the
those in the grant (2) the refinancing of universally
of franchises to similar loans and accepted Islamic
establish, mortgages; financial
construct, and instruments;
operate and h. Act as collection
maintain ferries, (3) such other purposes agent insofar as
wharves, markets as may be authorized by the payment
or the Monetary Board. orders, bills of
slaughterhouses exchange or other
and to lease A thrift bank shall commercial
public utilities, coordinate the amounts documents are
including access and maturities of its exclusive of riba
to extension and certificates with those of or interest
on-site research its loans, so as to ensure prohibitions;
services and adequate cash receipts i. Provide financing
facilities related for the payment of with or without
to agriculture and principal and interest at collateral by way
fishery activities; the time they become of Al-Ijarah
10. To organize and due. The bank shall accept (leasing), Al-Bai ul
operate schools its own certificates at Takjiri (sale and
in accordance least at the actual price of leaseback), or Al-
with Republic Act issue, in any prepayment Murabahah (cost-
No. 9155, of loans which mortgage plus profit sales
Governance of or chattel mortgage arrangement);
Basic Education debtors may wish to j. Handle storage
Act of 2001 and make: Provided, That the operations for
other pertinent date of maturity of the goods or
laws; and certificates is not later commodity
11. To exercise such than the date on which financing secured
other powers the payment would by warehouse
granted by the otherwise become due, in receipts presented
Cooperative Code the absence of the to the Bank;
or necessary to aforesaid prepayment. k. Issue shares for
carry out its the account of
purpose or (h) Purchase, hold and institutions and
purposes as convey real estate under companies
stated in its the assisted by the
Articles of same conditions as those Bank in meeting
cooperation of governing commercial subscription calls
bonds and other banks; or augmenting
debt securities their capital
eligible for (i) Engage in quasi- and/or fund
investment, the banking and money requirements as
maturities and market operations; may be allowed by
aggregate law;
amount of such (j) Open domestic letters l. Undertake various
investment.16 of credit; investments in all
transactions
(k) Extend credit facilities allowed by the
to private and Islamic Shari’a in
government such a way that
employees: Provided, shall not permit
That in the case of a the haram
borrower (forbidden), nor
who is a permanent forbid the halal
employee or wage earner, (permissible);
the 8. To act as an
treasurer, cashier or official depository
paymaster of the office of the
employing government or its
him is authorized, branches,
notwithstanding the subdivisions and
provisions instrumentalities
of any existing law, rules and of
and regulations to the government-
contrary, to make owned or
deductions from his controlled
salary, wage or income corporations,
pursuant to the terms of particularly those
his loan, to remit doing business in
deductions to the thrift the Autonomous
bank concerned, and Region;
collect such reasonable 9. To issue
fee for his services; investment
participation
(l) Extend credit against certificates,
the security of jewelry, muquaradah (non-
precious interest- bearing
stones and articles of bonds),
similar nature, subject to debentures,
such collaterals and/or
rules and regulations as the renewal or
the Monetary Board may refinancing of the
prescribe; and same, with the

16
Article, R.A. 9520
approval of the
(m) Offer other banking Monetary Board
services. of the BSP, to be
used by the Bank
Thrift banks may perform in its financing
the services under (b), operations for
(d), (e), (g) projects that will
and (i) only upon prior promote the
approval of the Monetary economic
Board. It may also development
perform commercial primarily of the
banking services, operate Autonomous
under an expanded Region;
banking authority, or 10. To carry out
exercise such other financing and joint
powers incident to a investment
corporation with prior operations by way
approval of the Monetary of mudarabah
Board17 partnership,
musharaka joint
venture or by
decreasing
participation,
murabaha
purchasing for
others on a cost-
plus financing
arrangement, and
to invest funds
directly in various
projects or
through the use of
funds whose
owners desire to
invest jointly with
other resources
available to the IB
on a joint

17
Section 10, RA No. 7906
mudarabah basis;
11. To invest in the
equity of allied
undertakings,
financial or non-
financial, as well
as in the equity of
enterprises
engaged in non-
allied activities, as
the Monetary
Board has
declared or may
declare as
appropriate from
time to time,
subject to the
limitations and
conditions
provided for
under the Manual
of Regulaions for
Banks and Other
Financial
Intermediaries -
Book I (MRBOFI) ;
and
12. To exercise the
powers granted
under R.A. No.
6848 and such
incidental powers
as may be
necessary to carry
on its business,
and to exercise
further the
general powers
mentioned in the
Corporation Law
and the General
Banking Act,
insofar as they are
not inconsistent
or incompatible
with the
provisions of R.A.
No. 6848.18
(1) the powers of (1) invest in the equities of (1) grant loans, In addition to the Provide financial, banking Perform any or all of
an investment allied enterprises as may be whether secured or powers provided in and credit services to the following services:
house as provided determined by the unsecured other laws, perform cooperative organizations
under existing laws; Monetary Board; (2) invest in readily any or all of the and their members. (1) open savings
marketable bonds and following services: However, the BSP may accounts for
(2) the power to (2) purchase, hold and other debt securities, prescribe appropriate safekeeping or
invest in non-allied convey real estate as commercial papers (1) extend loans and guidelines, ceilings and custody with no
enterprises; - specified under Sections 51 and accounts advances primarily for conditions on borrowing participation in profit
and 52 of R.A. No. 8791; receivable, drafts, bills the purpose of of a cooperative and losses except
(3) the power to of exchange, meeting the normal organization from a unless otherwise
19
own up to one (3) receive in custody acceptances or notes credit needs of cooperative bank. authorized by the
hundred percent funds, documents and arising out of farmers, fishermen or account holders to be
(100%) of the equity valuable objects; commercial farm families as well invested;
in a TB, an RB, a transactions; as cooperatives,
VI. FUNCTIONS financial allied (4) act as financial agent merchants, private (2) accept investment
enterprise, or a and buy and sell, by order of (3) issue domestic and public account placements
non-financial allied and for the account of their letters of credit; employees; and invest the same
enterprise; and customers, shares, for a term with the
evidences of indebtedness (4) extend credit (2) accept savings IB’s funds in
(4) in case of and all types of securities;
facilities to private and and time deposits; Islamically permissible
publicly-listed UBs, government transactions on
the power to own (5) make collections and employees; (3) act as participation basis;
up to one hundred payments for the account correspondent of
percent (100%) of of others and perform such (5)extend credit other financial (3) accept foreign
the voting stock of other services for their against the security of institutions; currency deposits
only one other UB customers as are not jewelry, precious from banks,
or KB. incompatible with banking stones and articles of (4) rediscount paper companies,
business; similar nature, subject with the LBP, DBP or organizations and
to such rules and any other bank, individuals, including

18
Section6, R.A. No. 6848
19
ART. 100 of RA 9520
(6) upon prior approval of regulations as the including its branches foreign governments;
the Monetary Board, act as Monetary Board may and agencies. Said
managing agent, adviser, prescribe; banks shall specify (4) buy and sell
consultant or administrator the nature of paper foreign exchange;
of investment (6) accept savings deemed acceptable
management/advisory/- and time deposits; for rediscount, as well (5) act as
consultancy accounts; as the rediscount rate correspondent of
(7)rediscount paper to be charged by any banks and institutions
(7) rent out safety deposit with the Land Bank of of these banks; to handle remittances
boxes; and the Philippines, (LBP), or any fund transfers;
Development Bank of (5) Act as collection
(8) engage in quasi-banking the Philippines (DBP), agent; and (6) accept drafts and
functions. and other issue letters of credit
government-owned or (6) Offer other or letters of
controlled banking services as guarantee, negotiate
corporations; provided in Section 53 notes and bills of
of R.A. No. 8791. exchange and other
(8) accept foreign evidence of
currency deposits as With prior approval of indebtedness under
provided under R.A. the Monetary Board, the universally
No. 6426, as an RB may perform accepted Islamic
amended; any or all of the financial instruments;
following services:
(9) act as (7) act as collection
correspondent for (1) accept current or agent insofar as the
other financial checking accounts: payment orders, bills
institutions; Provided, That such of exchange or other
RB has net assets of commercial
(10) purchase, hold at least P5 million; documents are
and convey real estate exclusive of riba or
as specified under (2) accept NOW interest prohibitions;
Sections 51 and 52 of accounts;
R.A. No. 8791; and (8) provide financing
(3) act as trustee with or without
(11) offer other over estates or collateral by way of
banking services as properties of farmers leasing, sale and
provided in Section 53 and merchants; leaseback, or cost plus
of R.A. No. 8791. profit sales
(4) act as official arrangement;
With prior approval of depository of
the Monetary Board, municipal, city or (9) handle storage
and subject to such provincial funds in the operations for goods
guidelines as may be municipality, city or or commodity
established by it, TBs province where it is financing secured by
may also perform the located; warehouse receipts
following services: presented to the
(5) sell domestic Bank;
(1) open current or drafts; and
checking accounts; (10) Issue shares for
(6) invest in allied the account of
(2) engage in trust, undertakings. institutions and
quasi-banking companies assisted by
functions and money the Bank in meeting
market operations; subscription calls or
augmenting their
(3) act as collection capital and or fund
agent for government requirements as may
entities, including but be allowed by law;
not limited to, the
Bureau of Internal (11) Undertake various
Revenue (BIR), Social investments in all
Security System (SSS) transactions allowed
and the Bureau of by the Islamic Shari’a
Customs (BOC); in such a way that
shall not permit the
(4) act as official haram (forbidden),
depository of national nor forbid the halal
agencies and of (permissible);
municipal, city or
provincial funds in the (12) Act as an official
municipality, city or government
province where the TB depository, or its
is located; branches, subdivisions
and instrumentalities
(5) issue mortgage and of government-
and chattel mortgage owned or controlled
certificates, buy and corporations,
sell them for its own particularly those
account or for the doing business in the
account of others, or autonomous region;
accept and receive
them in payment or as (13) Issue investment
amortization of its participation
loan; and certificates,
muquaradah (non-
(6) to invest in the interest-bearing
equity of allied bonds), debentures,
undertakings. collaterals and/or the
renewal and
refinancing of the
same, with the
approval of the
Monetary Board to be
used by the IB in its
financing operations
for projects that will
promote the
economic
development primarily
of the Autonomous
Region;

(14) carry out


financing and joint
investment operations
by way of mudarabh
purchasing for others
on a cost-plus
financing
arrangement, and
invest funds directly in
various projects or
through the use of
funds whose owners
desire to invest jointly
with other resources
available to the IB on a
joint mudarabh basis;
and
(15) Invest in equities
of the following allied
undertakings.

(a) Warehousing
companies;
(b) Leasing
companies;
(c) Storage
companies;
(d) Companies
engaged in the
management of
mutual funds but not
in the mutual funds
themselves; and
(e) Such other similar
activities as the
Monetary Board has
declared or may
declare as appropriate
from time to time,
subject to existing
limitations imposed by
law. 20
QUALIFICATIONS
At least five (5), and a maximum of fifteen (15) members of the board of directors of banks, two (2) of whom shall be independent directors.
Number and qualifications of incorporators. – Any number of natural persons not less than five (5) but not more than fifteen (15), all of legal age and a
majority of whom are residents of the Philippines, may form a private corporation for any lawful purpose or purposes. Each of the incorporators of a stock
corporation must own or be a subscriber to at least one (1) share of the capital stock of the corporation.21
VII. DIRECTORS
Non-Filipino citizens may become members of the board of directors of a bank to the extent of the foreign participation in the equity of said bank.22

MERGED OR CONSOLIDATED BANKS: In the case of a bank merger or consolidation, the number of directors shall not exceed twenty-one (21). 23

20
Section6, R.A. No. 6848
21
Section 10, Corporation Code
22
Section 7, RA 7721
23
Section 17, General Banking Law
A director shall have the following minimum qualifications:
(1) At least twenty-five (25) years of age at the time of his election or appointment;
(2) At least a college graduate or have at least five (5) years experience in business;
(3) Must have attended a special seminar on corporate governance for board of directors conducted or accredited by the Bangko Sentral: Provided,
That incumbent directors as well as those elected after 17 September 2001 must attend said seminar on or before 30 June 2003 or within a period
of six (6) months from date of election for those elected after 30 June 2003, as the case may be: Provided, further, That the following persons are
exempted from attending said seminar:
i. Foreign nationals who have attended corporate governance training covering core topics in the Bangko Sentral-recommended syllabus and
certified by the Corporate Secretary as having made aware of the general responsibility and specific duties and responsibilities of the board of
directors and specific duties and responsibilities of a director;
ii. Filipino citizens with recognized stature, influence and reputation in the banking community and whose business practices stand as testimonies to
good corporate governance;
iii. Distinguished Filipino and foreign nationals who served as senior officials in central banks and/or financial regulatory agencies, including former
Monetary Board members; or
iv. Former Chief Justices of the Philippine Supreme Court;
(4) FIT AND PROPER RULE: He must be fit and proper for the position of a director of the bank. The following must be considered: integrity/probity,
physical/mental fitness; relevant education; financial literacy/training; possession of competencies relevant to the job, such as knowledge and
experience, skills, diligence and independence of mind and sufficiency of time to fully carry out his responsibilities.24

An independent director shall refer to a person who –


(1) Is not or has not been an officer or employee of the bank, its subsidiaries or affiliates or related interests during the past three (3) years counted
from the date of his election;
(2) Is not a director or officer of the related companies of the institution’s majority stockholder;
(3) Is not a stockholder with shares of stock sufficient to elect one (1) seat in the board of directors of the institution, or in any of its related
companies or of its majority corporate shareholders;
(4) Is not a relative (spouse, parent, child, brother, sister, parent-in-law, son-/daughter-in-law, and brother-/sister-in-law), legitimate or common-law of
any director, officer or stockholder holding shares of stock sufficient to elect one (1) seat in the board of the bank or any of its related companies;
(5) Is not retained as professional adviser, consultant, agent or counsel of the institution, any of its related companies or any of its substantial
shareholders.
PERMANENT DISQUALIFICATIONS
(1) Persons having been convicted by final judgment of a court for All members of the Any officer or employee Same as Universal,
offenses involving dishonest or breach of trust such as, but not Board of Directors of of the CDA (Cooperative Commercial and
limited to, estafa, embezzlement, extortion, forgery, malversation, the rural bank shall be Development Authority) Thrift Bank.
swindling, theft, robbery, falsification, bribery, violation of BP 22, citizens of the shall be disqualified to be
violation of Anti-Graft and Corrupt Practices Act and prohibited acts Philippines at the elected or appointed to
and transactions under Section 7 of RA 6713 (Code of Conduct for time of their any position in a Coop
Ethical Standards for Public Officials and Employees); assumption to office Bank. Eective officials of
(2) Persons who have been convicted by final judgment of a court Provided, however, the Government, except

24
Section X142.2. Qualifications of an officer. Manual of Regulations for Banks. 2015
sentencing them to serve a maximum term of imprisonment of That nothing in this barangay officials, shall
more than six (6) years; Act shall be construed also be ineligible to
(3) Persons who have been convicted by final judgment of the court for as prohibiting any become officers and
violation of banking laws, rules and regulations; appointive or elective directors of Coop
27
(4) Directors , officers or employees of closed banks who were found public official from Banks.
to be culpable for such institution’s closure as determined by the serving as director,
Monetary Board; officer, consultant or
(5) Directors and officers of banks found by the Monetary Board as in any capacity in the
administratively liable for violation of banking laws, rules and bank.26
regulations where a penalty of removal from office is imposed, and
which finding of the Monetary Board has become final and
executory;

Directors and officers of banks or any person found by the Monetary Board
to be unfit for the position of directors or officers because they were found
administratively liable by another government agency for violation of
banking laws, rules and regulations or any offense/violation involving
dishonesty or breach of trust, and which finding of said government agency
has become final and executory.25
TEMPORARY DISQUALIFICATIONS
(1) Persons who refuse to fully disclose the extent of their business interest or any material information to the appropriate department of the SES
when required pursuant to law;
(2) Directors who have been absent or who have not participated for whatever reasons in more than fifty percent (50%) of all meetings, both regular
and special, of the board of directors who failed to physically attend for whatever reasons in at least twenty-five percent (25%) of all board
meetings in any year, except that when a notarized certification executed by the corporate secretary has been submitted attesting that said
directors were given the agenda materials prior to the meeting and that their comments/decisions thereon were submitted for
deliberation/discussion and were taken up in the actual board meeting;
(3) Persons who are delinquent in the payment of their obligations;
(4) Persons who have been convicted by a court for offenses involving dishonesty or breach of trust, such as, but not limited to estafa,
embezzlement, extortion, forgery, malversation, swindling, theft, robbery, falsification, bribery, violation of BP 22, violation of Anti-Graft and
Corrupt Practices Act and prohibited acts and transactions under Section 7 of RA 6713 (Code of Conduct for Ethical Standards for Public Officials
and Employees) but whose conviction has not yet become final and executory;
(5) Directors and officers of closed banks pending their clearance by the Monetary Board;
(6) Directors disqualified for failure to observe/discharge their duties and responsibilities prescribed under existing regulations;
(7) Directors who failed to attend the special seminar for board of directors as required;
(8) Persons dismissed/terminated from employment for cause;

25
Section X143.1. Persons disqualified to become directors. Manual of Regulations for Banks. 2015.
26
Section 5, RA 7353. An Act Providing For The Creation, Organization And Operation Of Rural Banks, And For Other Purposes.
27
Section 10. Limitation on officership/directorship, Guidelines For The Organization Of Cooperative Banks, Appendix 38, M Manual of Regulations for Banks. 2015.
(9) Persons under preventive suspension;
(10) Persons with derogatory records certified by the judiciary, the NBI, quasi-judicial bodies, government agencies, international police, monetary
authorities and similar agencies;
(11) Directors and officers of banks found by the Monetary Board as administratively liable for violation of banking laws, rules and regulations where a
penalty of removal from office is imposed;
(12) Directors and officers of banks or any person found by the Monetary Boards to be unfit for the position of director or officer because they were
found administratively liable by another government agency for violation involving dishonesty or breach of trust, and which finding of said
government agency is pending appeal before the appellate court, unless execution or enforcement thereof is restrained by the court; and
Directors and officers of banks found by the Monetary Board as administratively liable for violation of banking laws, rules and regulations where a
penalty of suspension from office or fine is imposed.28
QUALIFICATIONS
Not less than five (5) but not more than fifteen (15), all of legal age and majority of whom are residents of the Philippines. - Each of the incorporators of
stock corporation must own or be a subscriber to at least one (1) share of the capital stock of the corporation. 29

Required documents/ proof to be submitted


A. Evidence of Filipino citizenship
- In case of a natural-born Filipino citizen, original or certified true copy of birth certificate from issuing office. In case the birth certificate cannot
be produced by reason of destruction or otherwise, an affidavit to that effect by the civil registrar concerned should be submitted accompanied
by an affidavit of the incorporator, director, officer or subscriber himself stating, among other things, the date and place of his birth and the
names of his parents and their citizenship at the time of the affiant’s birth; and joint affidavit of two (2) disinterested/unrelated persons stating,
among other things, the date and place of the subject’s birth and the names of his parents and their citizenship at the time of the subject’s birth;
or
- In case of a naturalized citizen of the Philippines, the naturalization certificate, certificate of registration thereof with the civil registrar and other
VIII. INCORPORATORS pertinent papers; or
- In the absence of the abovementioned documents, a photocopy of the passport
B. Statement of Assets and Liabilities as of a date not earlier than ninety (90) days prior to the filing of application of each of the subscribers, sworn to
by the subscriber himself and duly notarized, or certified by a Certified Public Accountant.
- In the case of cash in banks: (a) name of depository bank, (b) nature of deposit, and (c) amount of deposit with each bank as of balance sheet
date;
- In the case of securities: (a) name and address of issuing corporation/entity, (b) number of shares owned as of balance sheet date, (c) par value,
(d) date and cost of acquisition, and (e) information as to whether the securities are actively traded in the stock market and, if so, their current
market price; 3
- In the case of land: (a) description (agricultural, etc); (b) area; (c) location; (d) date and cost of acquisition; (e) transfer certificate of title or tax
declaration number; (f) amount of encumbrance or lien, if any; (g) assessed value; and (h) current market value (state basis of valuation);
- In the case of real estate improvements: (a) description of improvement (residential house, etc.) (b) location; (c) date and cost of
acquisition/construction; (d) assessed value; and (e) current market value (state basis of valuation);
- In the case of accounts receivable, state the name and address of each debtor and the amount due from each; and

28
, Section X143.1. Persons disqualified to become directors, as amended by Circular Nos. 584 dated 28 September 2007 and 513 dated 10 February 2006.
29
Sec. 10 Title III of the Corporation Code of the Philippines
- In the case of accounts payable or other liabilities, state the name and address of each creditor and the amount owed to each.
C. Statement of Income and Expense for the last three (3) calendar years of each of the subscribers, sworn to by the subscriber himself and duly
notarized, or certified by a Certified Public Accountant.
D. Certified photocopies of Income Tax Returns for the last three (3) calendar years of each of the incorporators
E. Clearances from the National Bureau of Investigation (NBI) and Bureau of Internal Revenue (BIR) of each of the incorporators30
DISQUALIFICATIONS
The incorporator must not have been convicted of any crime involving moral turpitude, and unless otherwise allowed under the provisions of existing
laws, NOT Officers NOR Employees of government agency, instrumentality, department of office charged with the supervision of, or the granting of loans
to banks.
The entry of foreign banks in the Philippines through the establishment of branches shall be governed by the provisions of the Foreign Banks
Liberalization Act. The conduct of offshore banking business in the Philippines shall be governed by the provisions of the Presidential Decree No. 1034,
otherwise known as the "Offshore Banking System Decree."31

The Monetary Board may authorize a foreign bank to acquire up to one hundred percent (100%) of the voting stock of only one (1) bank organized under
the laws of the Republic of the Philippines. Within the same period, the Monetary Board may authorize any foreign bank, which prior to the effectivity of
this Act availed itself of the privilege to acquire up to sixty percent (60%) of the voting stock of a bank under the Foreign Banks Liberalization Act and the
Thrift Banks Act, to further acquire voting shares such bank to the extent necessary for it to own one hundred percent (100%) of the voting stock thereof.
In the exercise of the authority, the Monetary Board shall adopt measures as may be necessary to ensure that at all times the control of seventy percent
(70%) of the resources or assets of the entire banking system is held by banks which are at least majority-owned by Filipinos. Any right, privilege or
incentive granted to a foreign bank under this Section shall be equally enjoyed by and extended under the same conditions to banks organized under the
laws of the Republic of the Philippines.32
IX. FOREIGN EQUITY The aggregate foreign-owned voting stock owned by foreign individuals No rural bank shall be The equity investment of Classification of
and non-bank corporations shall not exceed forty percent (40%) of the operated without a any cooperative in any Shares: The Islamic
voting stock of the UB/KB, and sixty percent (60%) in the case of TBs.33 Certificate of Coop Bank shall not Bank's authorized
Authority from the exceed forty percent of capital stock shall
Monetary Board of the subscribed capital have the following
the Bangko Sentral ng stock of such Coop classifications and
Pilipinas. Rural banks Bank.36 features in relation to
shall be organized in its Islamic banking
the form of stock operation:
corporations. No less
than forty percent (3) Series "C" shares
(40%) of the voting shall comprise four
stocks of a rural bank million shares

30
BASIC GUIDELINES IN ESTABLISHING A BANK issued by the BSP Appendix to Sec. X102 OF THE Manual of Regulations for Banks
31
Section 72, Chapter VIII of RA 8791
32
Section 73, Chapter VIII of RA 8791
33
X126.1 Limits of stockholdings in a single bank, MORB2015
36
BSP CIRCULAR No. 858, 2014(subparagraph g, X126.1 Limits of stockholdings in a single bank, MORB2015)
shall be owned by equivalent to Four
citizens of the hundred million pesos
Philippines or (P400,000,000) to be
corporations or made available for
associations subscription by
organized under the Filipino and foreign
laws of the individuals and/or
Philippines at least institutions or entities.
37
sixty percent (60%) of
whose capital is
owned by such
citizens. Non-Filipino Subject to the
citizens may own, provisions of Section
acquire or purchase 29 of Commonwealth
up to sixty percent Act No. 613, and the
(60%) of the voting Anti-Dummy Law, as
stocks in a rural bank. amended, the Islamic
The percentage of Bank may employ
foreign-owned voting foreign nationals in
stocks shall be supervisory, technical
determined by the or advisory positions
citizenship of the for a period not
individual or exceeding five (5)
corporate years extendible for
stockholders of the limited periods upon
rural bank. Upon the recommendation
consultation with the of the Governor of the
rural banks in the Central Bank.
area, duly established
cooperatives and Foreign nationals
corporations primarily under employment
organized to hold contract within the
equities in rural banks purview of this Act,
may organize a rural their spouses and
bank and/or subscribe unmarried children
to the shares of stock under twenty-one (21)
of any rural bank: years of age, who are
Provided, That a not excluded by

37
Section 8 of RA 6848
cooperative or Section 29 of
corporation owning Commonwealth Act
or controlling the No. 613, shall be
whole or majority of permitted to enter
the voting stock of and reside in the
the rural bank shall be Philippines during the
subject to special period of employment
examination and to of such foreign
such rules and nationals.38
regulations as the
Monetary Board may
prescribe. If
subscription of
private shareholders
to the capital stock of
a rural bank cannot
be secured or is not
available, or
insufficient to meet
the normal credit
needs of the locality,
the Land Bank of the
Philippines, the
Development Bank of
the Philippines, or any
government-owned
or -controlled bank or
financial institution,
on representation of
the said private
shareholders but
subject to the
investment
guidelines, policies
and procedures of the
bank or financial
institution and upon
approval of the

38
Section 40 of RA 6848
Monetary Board of
the Bangko Sentral ng
Pilipinas, shall
subscribe to the
capital stock of such
rural bank, which
shall be paid in full at
the time of
subscription, in an
amount equal to the
fully paid subscribed
and unimpaired
capital of the private
stockholders or such
amount as the
Monetary Board may
prescribe as may be
necessary to promote
and expand rural
economic
development:
Provided, however,
That such shares of
stock subscribed by
the Land Bank of the
Philippines, the
Development Bank of
the Philippines or any
government-owned
or -controlled bank or
financial institution
may be sold at any
time at adjusted book
value: Provided,
finally, That in the sale
of shares of stock
subscribed by the
Land Bank of the
Philippines, the
Development Bank of
the Philippines or any
government-owned
or -controlled bank or
financial institution,
the registered
stockholders shall
have the right of
preemption within
one (1) year from the
date of offer in
proportion to their
respective holdings,
but in the absence of
such buyer,
preference, however,
shall be given to
residents of the
locality or province
where the rural bank
is located.34

Non-Filipino citizens
may become
members of the
Board of Directors of
a rural bank but their
participation in the
Board shall be limited
to their proportionate
share in the equity of
the rural bank:
Provided, however,
That at least one (1)
independent director
shall be elected to the
Board of Directors.35

34
Section 1 of RA 10574, AN ACT ALLOWING THE INFUSION OF FOREIGN EQUITY IN THE CAPITAL OF RURAL BANKS, AMENDING REPUBLIC ACT NO. 7353
35
Section 2 of RA 10574, AN ACT ALLOWING THE INFUSION OF FOREIGN EQUITY IN THE CAPITAL OF RURAL BANKS, AMENDING REPUBLIC ACT NO. 7353
A public offering of Commercial Banks are At least forty percent Republic Act No. Cooperative banks shall One of the functions
at least ten percent smaller than Universal (40%) of the voting 10574, amending the issue par value shares of the Islamic Bank is
(10%) of the Banks in terms of scope of stock of a thrift bank Rural Act of 1992 only. to issue shares for the
required minimum business activities. shall be owned by allowed foreign account of institutions
capital and this citizens of the investors to own, and companies
condition must be Commercial Banks can offer Philippines, except acquire or purchase assisted by the Bank in
complied with various banking services, where a new bank up to 60% of a voting meeting subscription
before it can be but they cannot engage in may be established as stock in a rural bank calls or augmenting
granted the license the activities of investment a result of a merger or their capital and/or
for authority to houses or investment banks consolidation of fund requirements as
operate as a such as underwriting of existing thrift banks may be allowed by law
Universal securities. with foreign holdings
Bank. Another in which case, the
requirement is the resulting foreign
listing of the bank holdings shall not be
shares in the stock increased but may be
exchange within reduced and, once
three years. reduced, shall not be
X. NECESSITY OF
increased thereafter
PUBLIC OFFERING
A publicly-listed beyond sixty percent
universal or (60%) of the voting
commercial bank stock of thrift banks.
may own up to one The percentage of the
hundred percent foreign-owned voting
(100%) of the voting stocks shall be
stock of only one determined by the
other universal or citizenship of
commercial bank.39 individual
stockholders and in
case of corporations
owning shares, by the
citizenship of each
stockholder in the said
corporations. 40

Going public will allow


thrift banks to raise

39
Section 25, RA 8691
40
Section 8 of RA 7906
money to be used to
bankroll the bank’s
branch network
expansion, acquire
new branch licenses,
improve its
information
technology
infrastructure, and
expand its loan and
investment portfolios.
The Monetary Board may prescribe rules and regulations on the types of stock a bank may issue, including the terms thereof and rights appurtenant
thereto to determine compliance with laws and regulations governing capital and equity structure of banks; Provided, That banks shall issue par value
stocks only.41
WIHTOUT STIPULATIONS ON THE CONTRACT
Rate of interest for the loan or forbearance of any money, goods or credits and the rate allowed in judgments, in the absence of Islamic banking
an express contract as to such rate of interest, shall be six percent (6%) per annum.42 business does not
involve interest (riba)
which is prohibited by
the Islamic Shari'a
XI. INTEREST principles.
COLLECTION WITH STIPULATION (CEILING OF RATE)
Rate of interest, including commissions, premiums, fees and other charges, on any loan, or forbearance of any money, goods or Islamic banking
credits, regardless of maturity and whether secured or unsecured, shall not be subject to any ceiling prescribed under or business does not
pursuant to the Usury Law, as amended.43 involve interest (riba)
which is prohibited by
the Islamic Shari'a
principles.44
Land Bank of the Bank of Commerce, PNB Savings Bank, Bangko Pasig, Rural Bataan Cooperative Bank, Al-Amanah Islamic
Philippines, BDO Private Bank, Bank One Savings and Bank of Iligan City, Bukidnon Cooperative Investment Bank of
Standard Chartered Philippine Veterans Trust Corporation, Inc., Rural Bank of Bank, Cooperative Bank the Philippines
XII. EXAMPLES45
Bank, Rizal Bank, Maybank, JP Bataan Development Itogon (Benguet), of Aurora, Cooperative
Commercial Morgan Chase Bank, BPI Direct Inc., Bank of Ormoc, Bank of Bohol,
Banking Bank, Sumitomo BanKo, Inc., A Savings Inc., Rural Bank of Cooperative Bank of

41
Section 9 of RA 8671
42
Circular No. 799 issued by BSP-MB effective July 2013
43
Section 1303 of the Manual of Regulations for Banks and Other Financial Intermediaries as amended by Central Bank Circular No. 905, series of 1982
44
Sec 39(2) of Republic Act No. 6848
45
http://www.bsp.gov.ph/banking/directory.asp
Corporation, Mitsui Banking Bank, Cordillera Infanta, Inc. Cagayan
Security Bank Corporation, Savings Bank, HSBC
Corporation, Union Robinsons Bank, Savings Bank.
Bank of the Philippine Bank of
Philippines, Al- Communications,
Amanah Islamic Citibank.
Investment Bank of
the Philippines,
Development Bank
of the Philippines,
Bank of the
Philippine