Rules for Cooperative Banks by BSP Circular No. 682

A Cooperative Bank is organized primarily to provide financial services to cooperatives and their members.
Only cooperative organizations registered under the Philippine Cooperative Code of 2008 (R.A. No. 9520) may establish a Cooperative Bank.
Cooperative Banks are considered cooperatives themselves, registered with the Cooperative Development Authority (CDA) and subject to BSP requirements.

Prospective Cooperative Banks must apply for licensing with the BSP and, upon approval, register with the CDA.
Applicants must submit documentation as per Section 4, Appendix 38 of the Manual of Regulations for Banks (MORB).
Compliance with pre-operating requirements under Section 11, Appendix 38 of the MORB is mandatory.

Minimum paid-up capital for Cooperative Banks is Ten Million Pesos (Php 10,000,000.00).
No single cooperative member may own or control more than 40% of total capital contributions.
This ownership limitation includes cooperatives holding government-converted preferred shares.
Cooperative Banks issue only par value shares.

Qualifications, responsibilities, and duties of the Board and officers follow MORB Sections X141 to X143.
At least one board member must have one year of banking experience; the manager must have actual banking experience.
Quorum for general assembly meetings is a majority (one-half plus one) of voting shares; amendments require a three-fourths quorum.
Voting rights are proportional to paid-up shares; articles of cooperation must be amended within one year to conform.
Board meeting quorum is majority of directors; each director has one vote.

Membership is either regular (cooperative organizations holding common shares) or associate (holders of preferred shares).
Common shares are non-withdrawable but may be transferred to qualified cooperatives.
Associate members may include individuals or primary cooperatives holding preferred shares.
Samahang Nayon (SN) and Municipal Katipunan ng mga Samahang Nayon (MKSN) holding common shares before R.A. No. 9520 must convert to full cooperatives within one year or their shares are converted to preferred shares.
Such conversions must be reported to BSP within six months of this circular.

A Cooperative Bank may be formed by at least five cooperatives.
Majority of voting shares must be held by cooperatives located in the province of the bank's head office.
Only one Cooperative Bank per province is allowed; a second may be approved if located in a different city or municipality and subject to BSP economic condition assessment.
Articles of Cooperation and By-Laws requiring registration must be accompanied by Monetary Board authority.

Cooperative Banks may establish branches or offices within their province, subject to MORB branching regulations.
Branches outside the province are allowed only if no existing Cooperative Bank offices are present in that area.
Capital requirements for branches: Php 10M for provincial branches, Php 50M for island group branches, Php 100M for nationwide branches excluding Metro Manila unless qualified.
Branching rules under Section X151 of MORB generally apply unless inconsistent with these rules.

Cooperative Banks primarily serve cooperatives and members but may serve non-members.
They may perform all banking services offered by other banks subject to BSP approval.
Restrictions on equity investments in allied undertakings apply; existing insurance equity holdings must be divested within five years.

Cooperative Banks enjoy the same privileges as rural, thrift, commercial, and universal banks regarding rediscounting with BSP and government banks.
Foreclosure and execution of judgment on loans not exceeding Php 250,000 are exempt from newspaper publication; only conspicuous posting is required.
Proof of notice is documented by sheriff’s affidavit.

Banking laws and regulations govern Cooperative Banks’ operations and governance, overriding Section 71 of RA 8791 (General Banking Act of 2000).

The regulations take effect 15 calendar days after publication in the Official Gazette or a newspaper of general circulation.