Question & AnswerQ&A (Republic Act No. 3779)
The short title of Republic Act No. 3779 is the "Savings and Loan Association Act."
The primary policy is to regulate and supervise savings and loan associations to ensure their operations are sound, stable, and efficient, thereby protecting the public and encouraging savings and credit facilities for industry, commerce, and agriculture.
It is defined as any corporation engaged in accumulating the savings of its members or stockholders and using such accumulations, together with its capital (if a stock corporation), for loans or investment in productive enterprises or government securities.
Savings and loan associations may be organized either as stock or non-stock corporations.
A stock corporation must have a fully paid-up capital of at least one hundred thousand pesos. However, a non-stock association operating for at least three years may convert to a stock corporation with a paid-up capital of fifty thousand pesos.
The Monetary Board of the Central Bank must approve the articles of incorporation and by-laws before filing with the Securities and Exchange Commission.
Loans must not exceed the amount deposited by the borrower plus four months' salary or regular income for permanent employees, or 70% of the fair value of acceptable collateral, with a maximum maturity of one year.
No, savings and loan associations are prohibited from advertising or representing themselves as banks or trust companies.
The penalty is a fine of not more than ten thousand pesos or imprisonment of not more than two years, or both, at the court's discretion.
The Monetary Board may issue orders to discontinue such practices, suspend or revoke licenses, take possession of the association’s assets and business, and can appoint a new board pending proper election.