Question & AnswerQ&A (Republic Act No. 5939)
The main purpose of Rural Banks is to provide adequate credit facilities to small farmers, small merchants, or cooperatives of such farmers or merchants, to meet their normal credit needs.
The Monetary Board of the Central Bank of the Philippines has the authority to formulate the necessary rules and regulations for the establishment and operation of Rural Banks.
No. One hundred percent of the capital stock of any Rural Bank shall be owned and held directly or indirectly by citizens of the Philippines.
If private shareholders cannot be secured or are unavailable, the Development Bank of the Philippines may subscribe to capital stock, up to one million pesos, upon the representation of private shareholders and approval of the Monetary Board.
Loans or advances should primarily meet the normal credit needs of small farmers owning or cultivating not more than fifty hectares and small merchants with capital investment not exceeding twenty-five thousand pesos. Preference is given to small cash requirements applicants.
Lands without Torrens titles with peaceful possession of more than five years, portions of friar land estates and other lands administered by the Bureau of Lands or other government agencies covered by sales contracts with at least five years installment payments, homesteads or free patent lands pending title issuance can be used as loan security without prior approval.
Foreclosure of mortgages where the loan amount including interest does not exceed three thousand pesos is exempt from newspaper publication and needs posting in at least three public places. Homesteaders or free patent holders have a right to redeem foreclosed land within two years. Tenants may offer produce corresponding to their share as security.
The Development Bank shall subscribe to capital stock equal to private shareholders' equity up to one million pesos to provide supplemental capital, subject to certification by the Monetary Board. Shares are preferred stock without voting rights and may be retired or replaced by private investors with pre-emptive rights for private shareholders.
Yes, when authorized by the Monetary Board and in accordance with Republic Act No. 265, Rural Banks may act as official depositories of municipal, city, or provincial funds with necessary limitations for protection.
Rural Banks with net assets not exceeding one million pesos are exempt from all taxes, charges, and fees. For net assets exceeding one million but not three million pesos, taxes are proportionate, and for net assets exceeding three million pesos, the bank pays taxes like any other bank.
Any justice of the peace acting as notary ex-officio shall administer oath or acknowledge instruments related to Rural Bank loans not exceeding three thousand pesos free of all charges, fees, and documentary stamp tax.
Yes. Registers of deeds shall accept instruments relating to Rural Bank loans not exceeding three thousand pesos for registration free of all charges, fees, and documentary stamp tax. Charges apply only on amounts exceeding three thousand pesos.