Capital Requirements for Rural and Cooperative Banks

The capital rules require rural banks and cooperative banks to meet prescribed minimum private capitalization levels.
The circular uses the Cooperative Code of the Philippines as the baseline for the minimum paid-in capital of local cooperative banks.
The circular sets capital thresholds for existing rural banks, new rural banks, and existing cooperative rural banks based on their current private paid-in capitalization.
The circular ties ownership and control changes to immediate compliance with minimum capital requirements in designated areas.

Existing rural banks must increase private capitalization through a structured capital build-up program.
New rural banks must be established with a specified minimum private paid-in capital.
Existing cooperative rural banks with insufficient private paid-in capitalization must raise capital in a defined schedule.
Rural banks in specific locations that undergo change in majority ownership or control must comply immediately with higher capital minimums.

The capital requirements apply to existing rural banks and require adoption of a capital build-up program.
The capital requirements apply to the establishment of new rural banks with prescribed minimum capital.
The circular applies to local cooperative banks through the Cooperative Code of the Philippines baseline, and to existing cooperative rural banks through a capital build-up program.
Special immediate-compliance capital minimums apply to a rural bank located in the National Capital Region (NCR) and the cities of Cebu and Davao.

Existing rural banks must raise their private capitalization to P1 million in four (4) equal semi-annual installments starting January 1, 1992.
Monetary Board approval for certain capital stock transactions is conditioned on prior or immediate capital compliance.
A rural bank in the NCR or in the cities of Cebu and Davao must immediately comply with the applicable minimum capital requirement upon specified ownership/control changes.
The applicable minimum capital requirement for such rural banks is P20 million for the NCR and P10 million for the cities of Cebu and Davao.

Local cooperative banks that may be established must meet a minimum paid-in capital of P1.25 million as prescribed by the Cooperative Code of the Philippines.
Existing cooperative rural banks with private paid-in capital contribution of less than P1.25 million must adopt a capital build-up program.
Existing cooperative rural banks must raise their private capitalization to P1.250 million in four (4) equal semi-annual installments starting January 1, 1992.

New rural banks must be established with a minimum private paid-in capital of P2 million, except in the NCR, Cebu, and Davao.
The circular provides location-specific capital consequences tied to the NCR and the cities of Cebu and Davao for rural banks undergoing majority ownership/control change.
The location-based capital minimums for rural banks under immediate-compliance conditions are P20 million (NCR) and P10 million (Cebu and Davao).

Approval by the Monetary Board of any sale or transfer, or a series of sale or transfer, of a rural bank’s capital stock in the NCR or in the cities of Cebu and Davao is subject to an immediate capital compliance condition.
The capital stock sale/transfer approval condition applies when the transaction will effect a change in the majority ownership or control of the voting stocks from one group of persons to another group.
The affected rural bank must immediately comply with the prescribed minimum capital requirement for new rural banks in those locations.
The prescribed minimum capital requirements for the locations are P20 million for the NCR and P10 million for the cities of Cebu and Davao.

BSP Circular No. 1294 was adopted on 9 July 1991.
The circular is signed by JOSE L. CUISIA, JR. as Governor (SGD.).
The implemented capital build-up installments begin on January 1, 1992 under the stated four (4) equal semi-annual installments schedules.