QuestionsQuestions (Republic Act No. 10574)
RA 10574 amends Republic Act No. 7353 (the Rural Bank Act of 1992). Its main purpose is to allow the infusion of foreign equity in the capital of rural banks, subject to certain ownership limits and regulatory safeguards.
At least forty percent (40%) of the voting stocks of a rural bank must be owned by Philippine citizens or by corporations/associations organized under Philippine laws where at least sixty percent (60%) of capital is owned by such citizens.
Non-Filipino citizens may own, acquire, or purchase up to sixty percent (60%) of the voting stocks of a rural bank.
The percentage of foreign-owned voting stocks is determined by the citizenship of the individual or corporate stockholders of the rural bank.
Upon consultation with rural banks in the area, duly established cooperatives and corporations primarily organized to hold equities may organize a rural bank and/or subscribe to shares. If such cooperative/corporation owns or controls the whole or majority of the voting stock of the rural bank, it shall be subject to special examination and rules/regulations prescribed by the Monetary Board.
The Land Bank of the Philippines, Development Bank of the Philippines, or any government-owned or -controlled bank or financial institution may subscribe upon representation of private shareholders, subject to the institution’s investment guidelines/policies/procedures and approval of the Monetary Board. The subscription must be paid in full at the time of subscription in an amount equal to the fully paid subscribed and unimpaired capital of private stockholders or as prescribed by the Monetary Board to promote/expand rural economic development.
Those shares may be sold at any time at adjusted book value. Registered stockholders have a one (1)-year right of preemption from the date of offer, proportionate to their holdings; if no buyer, preference is given to residents of the locality/province where the rural bank is located.
Yes, non-Filipino citizens may become members of the Board, but their participation is limited to their proportionate share in the equity of the rural bank.
At least one (1) independent director must be elected to the Board of Directors.
No director or officer may, directly or indirectly, borrow any deposits or funds of the bank; become a guarantor/indorser/surety for loans from the bank; or otherwise be an obligor for money borrowed from the bank, except with written approval of the majority of the directors excluding the concerned director. Violations result in immediate dismissal and penalties under Section 26 of the Act.
They must be primarily for meeting the normal credit needs of farmers, fishermen or farm families owning or cultivating land dedicated to agricultural production, as well as the normal credit needs of cooperatives and merchants.
Appraisal and verification of the status of the land is the full responsibility of the rural bank; any loan granted on land later found to be within the forest zone is for the sole account of the rural bank.
Foreclosure/executions are exempt from newspaper publication where the total amount of the loan (excluding interest due and unpaid) does not exceed P100,000 (or such amount as the Monetary Board may prescribe). In such cases, publication is sufficient by posting notices in conspicuous places in the municipal building, barangay hall, and barangay public market (if any) where the land is situated, for sixty (60) days before the public auction/execution. Proof is through an affidavit of the sheriff/officer and attached to the case records.
Yes. BSP must prescribe necessary rules and regulations on amendments in consultation with stakeholders and disseminate information allowing entry of foreign equity. Implementing rules must be published within ninety (90) days from publication of the Act in two (2) newspapers of general circulation.
It takes effect fifteen (15) days after complete publication in the Official Gazette or in at least two (2) newspapers of general circulation, whichever is earlier.