Question & AnswerQ&A (Republic Act No. 337)
The short title of the Act is 'The General Banking Act.'
Only duly authorized persons and entities may engage in such lending, and all entities regularly conducting such operations are considered banking institutions subject to this Act and other pertinent laws.
Insurance companies are exempted from the provisions of this Act, but they must present to the Central Bank information as required to ascertain the effects of their operations on the monetary, credit, and exchange situation in the Philippines.
The terms specifically include banks, banking institutions, commercial banks, savings banks, mortgage banks, trust companies, building and loan associations, and branches and agencies of foreign banks operating in the Philippines.
They shall be fined five hundred pesos for each day the violation continues and, in default of payment, shall suffer subsidiary imprisonment as prescribed by law. Officers and directors of such corporations shall be jointly and severally liable.
At least sixty percent (60%) of the capital stock must be owned by citizens of the Philippines, and at least two-thirds of the board of directors must be Filipino citizens.
They must be accompanied by a certificate of authority or compliance issued by the Monetary Board confirming the requirements of the law, public interest, economic conditions, capital sufficiency, organization, and integrity of the organizers.
Any officer, director, or agent who transacts business without the license shall be punished by imprisonment of one to ten years and a fine ranging from one thousand to ten thousand pesos.
The combined capital accounts must be at least fifteen percent (15%) of their total assets, excluding cash on hand, amounts due from banks, and government-guaranteed indebtedness.
Loans on real estate security shall not have maturity exceeding fifteen years, and such loans shall not exceed seventy percent (70%) of the total savings deposits of the bank.
They may acquire high-grade bonds and evidences of indebtedness, but investments in securities with maturities exceeding three years shall not exceed twenty percent (20%) of total deposits, except in exceptional circumstances approved by the Monetary Board.
They shall be punished by imprisonment of not less than one year nor more than ten years and a fine ranging from one thousand to ten thousand pesos.
They accumulate the small savings of stockholders, repay their accumulated savings and profits upon surrender of their shares, encourage industry, frugality, and home building, and loan funds to stockholders secured by unencumbered real estate and pledged shares.
Stockholders must pay capital stock in regular periodical payments. No loan in associations with assets over 100,000 pesos may exceed ten percent (10%) of total assets for any borrower or any piece of real estate. For associations under 100,000 pesos, the limit is ten thousand pesos.
Trust companies may act as trustees, executors, administrators, guardians, receivers, depositaries of estates, and manage legal trusts and estates, among other specific trust-related functions.
A trust company must deposit cash or securities approved by the Monetary Board in an amount equal to not less than two hundred fifty thousand pesos, which may be increased by the Monetary Board based on growth of trust business.
No, banking institutions shall not engage in insurance business as the insurer.
They shall not borrow deposits or funds of the bank either directly or as agents for others without written approval of the majority of directors excluding the concerned director. Violation results in immediate vacancy of office and penalties of imprisonment and fines.
Residents and citizens who are creditors of Philippine branches of foreign banks have preferential rights to the assets of such branches. Also, liability limits are set relative to the capital and funds assigned to the branch, with exceptions where the head office guarantees repayment.
It becomes unlawful for the foreign bank to transact business unless its license is renewed or reissued, and the Solicitor General may take proceedings to protect creditors and the public interests.