Question & AnswerQ&A (PRESIDENTIAL DECREE NO. 1317)
A commercial bank shall be a corporation primarily organized to perform the functions provided in section twenty-one of Republic Act No. 337 and to accept or create demand deposits subject to withdrawal by check.
Banks may grant clean loans for personal and household finance not exceeding the borrower’s savings and time deposits plus four months' salary or regular income, and loans secured by real estate or chattel mortgage shall not exceed 10% of the bank's total assets.
Loans to encourage breeding, raising, and production of livestock; equipment loans for productive machinery; and loans for acquisition of agricultural inputs such as seeds and fertilizers are encouraged.
The loan amount shall not exceed 50% of the commercial value of the animals at the time the loan is made, with possible additional loans up to 50% as the value of the stock increases.
Loans shall not exceed 70% of the appraised value of the real estate plus 70% of the appraised value of insured improvements, and titles to the real estate must be free from all encumbrances and in the mortgagor's name.
The mortgagor or debtor has the right to redeem the property within one year after the foreclosure sale by paying the amount fixed by the court with interest and costs incurred.
The direct indebtedness shall not exceed 15% of unimpaired capital and surplus, with an additional 15% allowed if loans are for subdivision or housing development purposes, subject to regulations of the Monetary Board.
Yes, other banking institutions may accept or create demand deposits subject to withdrawal by check upon prior approval and under conditions set by the Monetary Board.
The Monetary Board may prescribe further security requirements, reduce maximum ratios or loan maturities specified in the Act, but cannot increase maximum maturities beyond those established without special cases approved.
The decree took effect immediately upon its signing on March 29, 1978.