Question & AnswerQ&A (Republic Act No. 10361)
Republic Act No. 7353 is commonly known as the Rural Banks Act of 1992.
The primary purpose of the Act is to promote comprehensive rural development by creating, organizing, and operating rural banks to provide adequate credit facilities to farmers, merchants, cooperatives, and the rural community in general.
The Monetary Board of the Central Bank of the Philippines has the authority to formulate the necessary rules and regulations governing rural banks.
No, no rural bank shall be operated without a Certificate of Authority from the Monetary Board of the Central Bank.
The capital stock of any rural bank shall be fully owned and held directly or indirectly by Filipino citizens or corporations/associations/cooperatives qualified under Philippine laws, with exemptions allowed for certain cooperatives or corporations primarily organized to hold equities in rural banks, subject to the approval of the Monetary Board.
Yes, no director or officer shall borrow deposits or funds of the bank either directly or indirectly without the written approval of the majority of the other directors, and violations result in dismissal and penalties under Section 26 of the Act.
Rural banks shall extend loans primarily to meet the normal credit needs of farmers, fishermen, farm families, cooperatives, and merchants, with preference given to small cash requirements.
Merged or consolidated rural banks within a region are given incentives for seven years, including only one-third of required reserves, maintaining reserves in interest-bearing government securities, and unrestricted branching rights within the region.
Violators are subject to fines of up to Ten thousand pesos, imprisonment from six months to more than ten years, or both, at the discretion of the court, according to Section 26 of the Act.
Rural banks organized under the Act are exempt from all taxes, fees, and charges, except corporate income tax and local taxes, for five years from the date of commencement of operations or the Act's approval for existing banks.
Rural banks may accept savings and time deposits, open current accounts if they have at least five million pesos in net assets, act as correspondents for other financial institutions, offer collection services, act as official depositaries for local government funds, rediscount paper with certain banks, offer banking services under RA 337, and extend financial assistance to employees.
If private shareholders cannot meet subscription needs, these government banks may subscribe upon approval of the Monetary Board, with shares to be paid in full at subscription, and have the right of preemption to sell shares to private Filipino individuals.
Foreclosure publication requirements are relaxed for loans under One hundred thousand pesos, notices must be posted in conspicuous local areas, and homesteaders or free patent holders have redemption rights within one year of foreclosure.
The Central Bank, through the Monetary Board, can supervise operations, impose credit limits, interest rates, conduct audits, require technical assistance, appoint new management in cases of misconduct, and enforce compliance with applicable laws and regulations.
Loans to directors, officers, or stockholders owning two percent or more of capital stock are limited to the amount equivalent to their deposits and paid-in capital book value.