Question & AnswerQ&A (Republic Act No. 720)
The short title of Republic Act No. 720 is 'Rural Banks' Act.'
The declared policy is to promote and expand the rural economy in an orderly and effective manner by providing rural communities with means to improve productive activities and encourage cooperatives through a system of rural banks offering reasonable credit facilities.
The Monetary Board of the Central Bank of the Philippines formulates the necessary rules and regulations governing the establishment and operation of Rural Banks.
No, a Rural Bank cannot operate without a Certificate of Authority from the Monetary Board of the Central Bank.
At least sixty percent of the capital stock of any Rural Bank must be owned and held by citizens of the Philippines.
Loans are primarily for meeting the normal credit needs of small farmers owning or cultivating not more than fifty hectares, small merchants with capital investments not exceeding twenty-five thousand pesos, and cooperatives of such farmers or merchants.
Yes, but only with the written permission of the Monetary Board of the Central Bank, which determines when a Rural Bank may be authorized to open such accounts.
They may be fined up to two thousand pesos, imprisoned for up to one year, or both, at the court's discretion.
Yes, Rural Banks with assets not exceeding five hundred thousand pesos are exempt from all taxes, charges, and fees required in filing articles of incorporation.
The RFC may subscribe to capital stock of Rural Banks to provide supplemental capital, grant loans to Rural Banks under certain conditions, and assist in stimulating private investments in Rural Banks.