Question & AnswerQ&A (Act No. 3326)
The short title of Republic Act No. 8791 is "The General Banking Law of 2000."
The State recognizes the vital role of banks in providing an environment conducive to the sustained development of the national economy and recognizes the fiduciary nature of banking that requires high standards of integrity and performance.
Banks are classified into: Universal banks, Commercial banks, Thrift banks (including savings and mortgage banks, stock savings and loan associations, private development banks), Rural banks, Cooperative banks, Islamic banks, and other classifications as determined by the Monetary Board of the Bangko Sentral ng Pilipinas.
The operations and activities of banks shall be subject to supervision of the Bangko Sentral ng Pilipinas, which includes issuance of rules, conduct of examinations, investigations, inquiries into solvency, and enforcement of corrective action.
No person or entity shall engage in banking or quasi-banking functions without authority from the Bangko Sentral. The Monetary Board decides if a person or entity is performing such functions without authority and may conduct investigations.
The entity must be a stock corporation, have funds obtained from at least twenty (20) persons, and satisfy the minimum capital requirements prescribed by the Monetary Board.
Foreign individuals and non-bank corporations may own or control up to forty percent (40%) of the voting stock of a domestic bank. The percentage reflects the citizenship of individual stockholders and controlling stockholders of corporations.
The Monetary Board will assess the qualifications and disqualifications of individuals appointed or elected as bank directors or officers and may disqualify those found unfit based on integrity, experience, education, training, and competence.
The total amount shall not exceed 20% of the bank's net worth, with a possible additional 10% if adequately secured by certain approved types of collateral. There are exceptions and detailed inclusions based on related liabilities.
Such banks cannot accept or create demand deposits except upon prior approval of, and subject to conditions and rules prescribed by, the Monetary Board.
A universal bank has the authority to exercise the powers of an investment house as provided in existing laws and to invest in non-allied enterprises as provided in the Act, in addition to the powers authorized for commercial banks.
Violations are subject to penalties under the New Central Bank Act. Directors or officers may be suspended or removed by the Monetary Board, and corporations may be dissolved by quo warranto proceedings initiated by the Solicitor General.
Banks or quasi-banks shall not declare dividends greater than their accumulated net profits minus losses and bad debts, and they cannot declare dividends if their clearing account with the Bangko Sentral is overdrawn or if they fail to meet certain liquidity requirements.
Conservatorship refers to placing a bank or quasi-bank under the control of a conservator appointed to oversee its administration, based on grounds and procedures governed by the New Central Bank Act, to protect depositors and the public interest.