Slide No.

1. In line with the government policy of providing a stable and efficient banking and financial
system, the Genearl Banking Law of 2000 was passed to replace the old General Banking Act of
1949. The General Banking Law of 2000 is the law that generally governs the regulation,
organization and operation of banks, quasi-banks, and other quasi-entities.

2. It primarily governs Universal Banks (Secs. 23-28, GBL) and Commercial Banks (Secs. 29-32,
GBL), and has suppletory application to Thrift Banks (which is primarily governed by RA 7906,
the Thrift Banks Act), Rural Banks (primarily governed by RA 7353, the Rural Banks Act), and
Cooperative Banks (primarily governed by RA 6938, the Cooperative Code).

Slide No. 4

To start with, let me emphasize that the banks are not ordinary business corporations,
organized under the general business corporation laws. Some of the corporation laws may
however apply as I will mention in a few minutes.

Special rules will apply to strikes and lockouts, ownership of banks, Liquidity and Security,
Loans, Conservatorship, Receivership and Liquidation, and Trust Operations. While
corporation laws will come into play, but generally everything is not done according to the
general corporation laws.

1. This (definition) is usually referred to as “core-banking functions” of mobilizing savings

(through deposit-taking) and allocating resources (through lending).

1. In addition to these core functions, CB can accept drafts, issue letters of credit,
discount and negotiate drafts and other evidence of indebtedness, buy and sell
foreign exchange and bullion; UB can also underwrite securities and invest in
equities of the so-called non-allied enterprises.

2. It cannot issue no-par value shares

funds are obtained from the public, i.e. deposits of twenty (20) or more persons.

1. BSP, which is the central monetary authority, is the banking supervisor in charge with safe
and sound banking system. No person or entity can engage in banking within the Philippines,
without prior authorization from the BSP.

- BSP has the correlative power to suspend or revoke banking licenses.

- the Solicitor General can institute proceedings for dissolution of an entity conducting
banking operations without the requisite license.

- there are also criminal sanctions for violations of any provision of the GBL, which
includes fines for erring entities and imprisonment for erring officials. NB: even private persons
can denounce them before the prosecuting officer.
 - Rules of Conduct and Standards of operations for banks, quasi-banks, and other non-
bank financial institutions are compiled in “The Manual of Regulations for Banks” and “Manual
of Regulations for Non-bank financial institutions.”

2. the Securities and Exchange Commission shall not register the articles of incorporation of any
bank, or any amendment thereto, unless accompanied by a certificate of authority issued by the
Monetary Board, under its seal.”

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1. Section 3.2 of the GBL classifies banks into Universal Banks, Commercial Banks, Rural
Banks, Thrift Banks, Cooperative Banks, Islamic Banks, other classification of banks as
determined by the Monetary Board (MB) of the BSP.
2. Universal banks are sometimes referred to as expanded commercial banks.
3. Banco De Oro Universal Bank, Bank of the Philippine Islands, Rizal Commercial
Banking Corporation, Security Bank Corporation, Union Bank of the Philippines,
United Coconut Planters Bank, Al-Amanah Islamic Investment Bank of the Philippine,
Development Bank of the Phil, Land Bank of the Phil, ANZ Banking Group Ltd., Hong
Kong Shanghai Banking Corporation

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1. Commercial Banks (CB) – banks that have, in addition to the general powers incident to
corporations, all such powers as may be necessary to carry on the business of commercial
banking, such as accepting drafts and issuing letters of credit; discounting and negotiating
promissory notes, drafts, bills of exchange, and other evidences of debt; accepting or creating
demand deposits; receiving other types of deposits and deposit substitutes; buying and selling
foreign exchange and gold or silver bullion; acquiring marketable bonds and other debt
securities; and extending credit, subject to such rules as the Monetary Board may promulgate.

Sec. 29

2. Bank of Commerce, Citibank, Maybank Phil., Philippine Bank of Communications,

Philippine Veterans Bank, BDO Private Bank

The Al-Amanah Islamic Investment Bank of the Philippines (abbreviated AAIIBP) or Al-
Amanah Islamic Bank is the first and only Islamic bank in the Philippines.

Al-Amanah Islamic Bank traces its roots to the Philippine Amanah Bank, established by
President Ferdinand Marcos in 1973 by virtue of Presidential Decree No. 264.[1] With an initial
capital of 100 million pesos, it was one of the world's first Islamic banks.[2] Its charter originally
mandated it to provide financial services to the provinces of Basilan, Cotabato,Lanao del
Norte, Lanao del Sur, Palawan, Sulu, Tawi-Tawi, Zamboanga del Norte and Zamboanga del
Sur, where there are large, if not predominant, Muslim populations.[3]

In 1974, the bank's charter was amended by Presidential Decree No. 542, allowing it to open
branches in Maguindanaoand Sultan Kudarat. The amended charter also mandated that the
bank provide banking services according to Islamic principles, which was not explicitly
provided for under the original charter.[3]

In 1989, the bank was re-chartered and re-capitalized pursuant to Republic Act No. 6848, and
was subsequently renamed the Al-Amanah Islamic Investment Bank of the Philippines, with a
capital of one billion pesos. Between 1990 and 2007, the bank was under the supervision of
the Bureau of the Treasury.[4]

The bank was sold to another government-owned bank, the Development Bank of the
Philippines, in 2008.[1] However, in 2012, DBP announced that it intended to divest itself of the
bank, since it does not have the expertise to handle an Islamic financial institution.[4]

iii. Single Borrower’s Limit (SBL): Except as the MB may otherwise prescribe for reasons of
national interest, the total amount of loans, credit accommodations and guarantees as may be
defined by the MB that may be extended by a bank to any person, partnership, association,
corporation or other entity shall at no time exceed 25% of the net worth of such bank.[29] The
basis for determining compliance with SBL is the total credit commitment of the bank to the
borrower.[30]

GBL provides that, unless the MB prescribes otherwise, the total amount of loans, credit
accommodations and guarantees prescribed in the preceding paragraph may be increased by an
additional 10% of the net worth of such bank provided the additional liabilities of any borrower
are adequately secured by trust receipts, shipping documents, warehouse receipts or other
similar documents transferring or securing title covering readily marketable, non-perishable
goods which must be fully covered by insurance.[31]

1. DORSI Accounts: GBL imposes restrictions (not total prohibition) on borrowings and
security arrangement by directors, officers, and stockholders of the bank. These
restrictions apply when the loan or financial accommodation of DORSI is in excess of 5%
of the capital and surplus of the lending bank or in the maximum amount permitted by
law, whichever is lower. The GENERAL RULE is: a director or officer of any bank shall
neither, directly or indirectly, for himself or as the representative or agent of others,
borrow from such bank; nor become a guarantor, indorser or surety for loans from such
bank to others, or in any manner be an obligor or incur any contractual liability to the
bank. The EXCEPTION is when there is a written approval of the majority of all the
directors of the bank, excluding the director concerned. The required approval shall be
 entered upon the records of the bank and a copy of such entry shall be transmitted
forthwith to the appropriate supervising and examining department of the BSP.[32]
2. Limits on loans and other credit accommodations (collaterals): Unless otherwise
prescribed by the MB, loans and other credit accommodations against “real estate” shall
not exceed 75% of the appraised value of the respective real estate security, plus 60% of
the appraised value of the insured improvements, and such loans may be made to the
owner of the real estate or to his assignees.[33] Those against “security of chattels and
intangible properties” shall not exceed 75% of the appraised value of the security, and
such loans and other credit accommodations may be made to the title-holder of the
chattels and intangible properties or his assignees.[34]