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BATAS PAMBANSA BILANG. 61BATAS PAMBANSA BLG. 61 - AN ACT
AMENDING FURTHER REPUBLIC ACT NUMBERED THREE HUNDRED THIRTY-SEVEN, AS
AMENDED, REGULATING BANKS AND BANKING INSTITUTIONS AND FOR OTHER
PURPOSES, OTHERWISE KNOWN AS THE "GENERAL BANKING ACT"
Section 1.
Sec. 2-A of Republic Act Numbered Three hundred thirty-seven, as
amended, is hereby further amended to read as follows:
"Sec. 2-A.
The following entities shall not be considered as banking institutions
but shall be subject to regulation by the Monetary Board which may
include, but need not be limited to, the imposition of net worth to
risk assets ratios, reserve requirements, interest rate ceilings,
methods of computation thereof, prescribing maximum charges which may
be collected, minimum capitalization, and submission of statistical
reports:
"(a) Entities
regularly engaged in the lending of funds or purchasing of
receivables or other obligations with funds obtained from the
public through the issuance, endorsement or acceptance of debt
instruments of any kind for their own account, or through the
issuance of certificates of assignment or similar instruments
with recourse, trust certificates, or of repurchase agreements,
whether any of these means of obtaining funds from the public is
done on a regular basis or only occasionally;
"(b) Entities regularly engaged in the lending of
funds which receive deposits only occasionally; and
"(c) Trust companies, building and loan associations,
and non-stock savings and loan associations, but such non-deposit
accepting entities shall continue "to be supervised and regulated by
the Monetary Board under the pertinent provisions of this Act, and/or
Republic Act Nos. 265, as amended, and 3779."
Sec. 2. Sec. 2-B of the same Act is hereby
amended to read as follows:
"Sec. 2-B.
The operations and activities of non-bank financial
intermediaries, except insurance companies, shall be subject to
regulation by the Monetary Board which may include, but need not
be limited to, the imposition of constraints covering the (a)
minimum size of funds received, (b) methods of marketing and
distribution, (c) terms and maturities of funds received, and (d)
uses of funds: Provided, however, That if such entities are
authorized by the Central Bank to perform quasi-banking
functions, they may be further subject to regulation under
Sec. 2-A of this Act."
Sec. 3. Sec. 6-A of the same Act is hereby
further amended to read as follows:
"Sec. 6-A.
For purposes of uniformity, simplicity and equality of treatment,
banking institutions shall be classified into the following
general categories: (a) Commercial banks, (b) Thrift banks,
composed of (1) Savings and mortgage banks, (2) Stock savings and
loan associations, and (3) Private development banks, and (c)
Rural banks. Specialized and unique government banks, such as the
Development Bank of the Philippines and the Land Bank, are not covered
by this classification, but shall be subject to supervision and
regulation by the Central Bank pursuant to the provisions of
Section twenty-five of Republic Act No. 265.
"The Monetary Board shall determine the proper classification of other
types of banking institutions that may be established after the
approval of this Act."
Sec. 4. Sec. 6-B of the same Act is hereby
further amended to read as follows:
"Sec. 6-B.
With prior approval of the Monetary Board, commercial banks, thrift
banks and rural banks may establish branches, agencies, or extension
offices, on a nationwide basis.
"Notwithstanding the provisions of any law to the contrary, no
government or private banks may open branches, agencies, or extension
offices without prior approval of the Monetary Board."
Sec. 5. Sec. 8 of the same Act is hereby
further amended to read as follows:
"Sec. 8. No
banking institutions shall issue no-par value stock. For the purpose
primarily of determining the permanency of equity, the types of
stock a banking institution may issue, including the terms
thereof and the rights appurtenant thereto, shall be subject to
such rules and regulations as the Monetary Board may prescribe,
the provision of any law to the contrary notwithstanding."
Sec. 6. Sec. 12-C of the same Act is hereby
amended to read as follows:
"Sec. 12-C.
A corporation organized primarily for the purpose of owning
equity in thrift banks or rural banks may own more than thirty
percent (30%) of the voting stock of a thrift bank and/or rural
bank up to a majority or all of the equity thereof: Provided,
That the acquisition of such equity is subject to the prior
approval of the Monetary Board which shall promulgate appropriate
guidelines to govern such investments: Provided, further, That
the equity ownership of any individual, related group or
corporation in the parent corporation owning more than thirty
percent (30%) of the voting stock of the thrift bank or rural
bank is in accordance with the provisions of Sec. 12, 12-A,
12-B and 12-D of this Act: Provided, finally, That the parent
company owning a majority or all of the equity in a bank may not
engage in activities not allowed to the invested bank.
Sec. 7. The same Act is hereby amended by adding a
new section after Sec. 12-D, to read as follows:
"Sec. 12-E.
To promote competitive conditions in financial markets, the Monetary
Board may further limit the equity investments, direct or indirect, in
banks and non-bank financial intermediaries performing quasi-banking
functions."
Sec. 8. Sec. 13 of the same Act is hereby
further amended to read as follows:
"Sec. 13. At
least two-thirds of the members of the board of directors of any
bank or banking institution which may be establish after the
approval of this Act shall be citizens of the Philippines:
Provided, That no appointive or elective public official, whether
full-time or part-time, shall at the same time serve as officer
of any private bank, except in cases where such service is
incident to financial assistance provided by the government or a
government-owned or controlled corporation to the bank: Provided,
further, That in the case of a bank merger or consolidation duly
approved by the Monetary Board, the limitation on the number of
directors in a corporation, as provided for in section fourteen
of the Corporation Code of the Philippines, shall not be applied
so that membership in the new board may include up to the total
number of directors provided for in the respective articles of
incorporation to the merging or consolidating banks."
Sec. 9. Sec. 14-A of the same Act is hereby
further amended to read as follows:
"Sec. 14-A.
Foreign banking institutions without branches in the Philippines,
including (a) their wholly-or majority-owned subsidiaries, and
(b) their holding companies having majority holdings in such
foreign banking institutions, may invest, with prior approval of
the Monetary Board, in equities of local companies engaged in
financial allied undertakings under the same restrictions imposed
on domestic banks of the same category, as provided for in
Section s twenty-one-A and thirty-one of this Act or in other
banking laws. In any case, the aggregate holdings of voting
stocks of all foreign entities in any single domestic financial
enterprise shall remain a minority participation in that
enterprise.
"With prior approval of the Central Bank, these foreign entities
may also purchase equities in domestic banks: Provided, That their
aggregate holdings of voting stocks shall remain at all times
subject to the limitations prescribed in Sec. 12-A of this Act.
"The foregoing limitations shall not apply either to international or
regional inter-governmental financial organizations and their
subsidiaries of which the Philippines is a member."
Sec. 10. Sec. 21 of the same Act is hereby
further amended to read as follows:
"Sec. 21. A
commercial banking corporation, in addition to the general powers
incident to corporations, shall have all such powers as shall be
necessary to carry on the business of commercial banking, by
accepting drafts and issuing letters of credit, by discounting
and negotiating promissory notes, drafts, bills of exchange, and
other evidences of debts; by receiving deposits; by buying and
selling foreign exchange and gold or silver bullion, and by
lending money against personal security or against securities
consisting of personal property or mortgages on improved real
estate and the insured improvements thereon.
"Commercial banks may acquire readily marketable bonds and other debt
securities subject to such rules as the Monetary Board may promulgate.
These rules may include, but need not be limited to the determination
of bonds and other debt securities eligible for investment, the
maturities and aggregate amount of such investment."
Sec. 11. Sec. 21-A of the same Act is hereby
further amended to read as follows:
"Sec. 21-A.
Commercial banks, including Government banks and foreign banks
with existing local branches, may invest in equities of the
following allied undertakings: warehousing companies, leasing
companies, storage companies, safe deposit box companies,
companies engaged in the management of mutual funds but not in
the mutual funds themselves, banks, and such other similar
activities as the Monetary Board may declare as appropriate from
time to time: Provided, That (a) the total investment in equities
shall not exceed twenty-five percent (25%) of the net worth of
the bank; (b) the equity investment in any one enterprise shall
not exceed fifteen percent (15%) of the net worth of the bank; (c) the
total equity investment of the bank in any single enterprise,
except as provided in Sec. 21-C of this Act or where the
enterprise is a non-financial allied undertaking; and (d) the
equity investment in other banks shall be deducted from the
investing bank's net worth for purposes of computing the
prescribed ration of net worth to risk assets. Equity investments
shall not be permitted in non-related activities.
"Where the allied undertaking is a wholly or majority-owned subsidiary
of the bank, the Central Bank may subject it to examination."
Sec. 12. The same Act is hereby amended by adding
three new sections after Sec. 21-A thereof, to read as follows:
"Sec. 21-B.
The provisions in this or in any other Act to the contrary
notwithstanding, the Monetary Board, whenever it shall deem
appropriate and necessary to further national development
objectives or support national priority projects, may authorize a
commercial bank, a bank authorized to provide commercial banking
services, as well as a government-owned and controlled bank, to
operate under an expanded commercial banking authority and by
virtue thereof exercise, in addition to powers authorized for
commercial banks, the powers of an Investment House as provided
in Presidential Decree No. 129, invest in the equity of a
non-allied undertaking, or own a majority or all of the equity in
a financial intermediary other than a commercial bank or a bank
authorized to provide commercial banking services: Provided, That
(a) the total investment in equities shall not exceed fifty
percent (50%) of the net worth of the bank; (b) the equity
investment in any one enterprise whether allied or non-allied
shall not exceed fifteen percent (15%) of the net worth of the
bank; (c) the equity investment of the bank, or of its wholly
or majority-owned subsidiary, in an single non-allied
undertaking shall not exceed thirty-five percent (35%) of the
total equity in the enterprise nor shall it exceed
thirty-five percent (35%) of the voting stock in that enterprise;
and (d) the equity investment in other banks shall be deducted
from the investing bank's net worth for purposes of computing the
prescribed ratio of net worth to risk assets.
"In the exercise of the authority
granted herein, the Monetary Board shall take into consideration
the capability of the bank in terms of its past performance as a
bank or as a financial intermediary, financial resources and
technical expertise, and the investment of the bank shall be
subject to such regulations as the Monetary Board may prescribe
which may include but need not be limited to the categories of
undertakings or projects that may be invested in by the bank
directly or through its wholly or majority-owned subsidiary or
the extent of exposure in any of the activities authorized in
this section.
"Where the enterprise is wholly or majority-owned by the bank, the
Central Bank may subject it to examination.
"In order to avoid undue concentration of economic power, the total
equity investments of banks, quasi-banks and their subsidiaries in a
single enterprise or industry may be subject to such limitations as may
be prescribed by the Monetary Board, but shall in any case remain a
minority in any enterprise except as may be otherwise approved by the
President (Prime Minister).
"For the purpose of determining
compliance with the limitations on equity holdings by a bank in a
non-allied undertaking, the equity holdings of the bank in the
undertaking, when combined with those of its directors, officers
and substantial stockholders, and its wholly or majority-owned
subsidiaries shall not exceed the prescribed thirty-five percent
(35%) of the equity of that undertaking. The same rule shall be
observed in the case of an equity investment by a subsidiary wholly or
majority-owned by the bank, where the investors in the undertaking
consist of the subsidiary, the bank which owns the majority or all of
the equity of the subsidiary, the officers, directors and substantial
stockholders of the bank, as well as those of the
subsidiary.
"The regulations issued by the Monetary Board to implement the
provisions of this section and Sec. 21-C of this Act shall be
reported to the President (Prime Minister) and to the Batasang Pambansa
within fifteen days from the date of their issuance. Such
regulations shall be published in a newspaper of general circulation.
"Sec. 21-C.
The provisions of this Act or of any other Act to the contrary
notwithstanding, a commercial bank or any bank authorized to
provide commercial banking services, or to operate under an
expanded commercial banking authority, may own more than thirty
percent (30%) of the voting stock of a thrift bank or a rural
bank up to a majority or all of the equity thereof: Provided,
That the acquisition of such equity or equities is subject to the
prior approval of the Monetary Board which shall promulgate
appropriate guidelines to govern such investments: Provided,
further, That the equity ownership of any individual, related
group or corporation in the investing bank is in accordance with
the provisions of Sec. 12, 12-A, 12-B and 12-D of this Act:
Provided, finally, That the equity investment in other banks
shall be deducted from the investing bank's net worth for
purposes of computing the prescribed ratio of net worth to risk
assets.
"Sec. 21-D. The Monetary Board is hereby
authorized to take such measures as may be necessary, when the expanded
commercial banking authority permitted under the provisions of this Act
would result in an undue concentration of economic power in one or more
financial institutions or in corporations, partnerships, groups or
individuals with related interest."
Sec. 13. Sec. 22 of the same Act is hereby
further amended to read as follows:
"Sec. 22.
The combined capital accounts of each commercial bank shall not be less
than an amount equal to ten percent (10%) of its risk assets which is
defined as its total assets minus the following assets:
"(a) Cash on hand;
"(b) Amounts
due from the Central Bank;
"(c) Evidences of indebtedness of the Republic of the
Philippines and of the Central Bank, and any other evidences of
indebtedness or obligations the servicing and repayment of which are
fully guaranteed by the Republic of the Philippines;
"(d) Loans to the extent covered by hold-out on, or
assignment of, deposits maintained in the lending bank and held in the
Philippines;
"(e) Loans or acceptances under letters of credit to
the extent covered by margin deposits; and
"(f) Other non-risk items which the Monetary Board
may, from time to time, authorize to be deducted from total assets.
"The Monetary Board shall
prescribe the manner of determining the total assets of banking
institutions for the purposes of this section, but contingent accounts
shall not be defined as being included among total assets.
"The Monetary Board may, consistent with prudent banking and
general economic conditions obtaining at the time, prescribe
ratios of net worth to risk assets lower than that hereinabove
prescribed: Provided, That such ratios shall not be less than
five percent (5%): Provided, further, That the reduction from the
ration will apply uniformly to all banks, regardless of category,
beyond a certain minimum size with respect to the level of their
capital accounts: Provided, finally, That the Monetary Board may
subsequently raise a ratio but any such upward adjustment shall
be made effective only after a reasonable period of time. The Monetary
Board may, at its discretion, require that the ratio of net worth to
risk assets be determined on the basis of the combined risk assets of
the parent bank and its subsidiaries, financial or otherwise.
"Whenever the capital accounts of
a bank are deficient with respect to the requirements of this Act, the
Monetary Board, after considering a report of the appropriate
supervising department on the state of solvency of the institution
concerned, shall limit or prohibit the distribution of net profits and
shall require that part or all of net profits be used to increase the
capital accounts of the institution until the minimum requirement has
been met. The Monetary Board may, furthermore, after considering the
aforesaid report of the appropriate supervising department and if the
amount of the deficiency justifies it, restrict or prohibit the making
of new investments of any sort by the bank, with the exception of
purchases of readily marketable evidences of indebtedness included
under Subsection (c) of this Section , until the minimum required
capital ratio has been restored.
"Where in the process of a bank merger or consolidation, the
merged or constituent bank may not be able to comply fully with
the net worth to risk assets ratio herein prescribed, the
Monetary Board may, at its discretion, temporarily relieve the
bank from full compliance with this requirement under such
conditions as it may prescribe."
Sec. 14. Sec. 23 of the same Act is hereby
further amended to read as follows:
"Sec. 23.
Except as the Monetary Board may otherwise prescribe, the total
liabilities of any person, company, corporation or firm, to a
commercial banking corporation for money borrowed, excluding (a)
loans secured by obligations of the Central Bank or of the
Philippine Government; (b) loans fully guaranteed by the government as
to the payment of principal and interest; (c) loans to the extent
covered by hold-out on, or assignment of, deposits maintained in
the lending bank and held in the Philippines; (d) loans and
acceptances under letters of credit to the extent covered by
margin deposits; and (e) other loans or credits which the
Monetary Board may, from time to time, specify as non-risk
assets, shall at no time exceed fifteen percent (15%) of the
unimpaired capital and surplus of such bank.
"The total liabilities of any
borrower may amount to a further fifteen percent (15%) of the
unimpaired capital and surplus of such banking corporation
provided the additional liabilities are adequately secured by
shipping documents, warehouse receipts or other similar documents
transferring or securing title covering readily marketable,
nonperishable staples, which staples must be fully covered by
insurance, and must have a market value equal to at least one
hundred and twenty-five percent (25%) of such additional
liabilities.
"The term "liabilities", as used
herein, shall mean the direct liability of the maker or acceptor
of paper discounted with or sold to such bank and the liability
of the indorser, drawer or guarantor who obtains a loan from or
discounts paper with or sells papers under his guaranty to such
bank and shall include in the case of liabilities of a
co-partnership or association the liabilities of the several
members thereof and shall include in the case of liabilities of
a corporation all liabilities of subsidiaries thereof in which
such corporation owns or controls a majority interest: Provided,
That even if the parent corporation, co-partnership or
association has no liability to the bank, the Monetary Board may
prescribe the combination of the liabilities of subsidiary
corporations or members of the co-partnership or association
under certain circumstances, including but need not be limited to
any of the following situations: (a) the parent corporation,
co-partnership or association guarantees the repayment of the
liabilities; (b) the liabilities were incurred for the
accommodation of the parent corporation or another subsidiary or
of the co-partnership or association; or (c) the subsidiaries
through separate entities operate merely as departments or
divisions of a single enterprise: Provided, finally, That the
discount of bills of exchange drawn in good faith against
actually existing values, and the discount of commercial or
business paper actually owned by the person negotiating the same,
shall not be considered as money borrowed for the purpose of this
section.
"Loan accommodations granted by
commercial banks to any other bank, as well as deposits
maintained by them in any bank licensed to do business in the
Philippines, shall be subject to the loan limit to any single
borrower as herein prescribed."
Sec. 15. Sec. 29 of the same Act is hereby
further amended to read as follows:
"Sec. 29. A
savings and mortgage bank shall be any corporation organized for
the purpose of accumulating the savings of depositors and
investing them, together with its capital, in readily marketable
bonds and debt securities; commercial papers and accounts receivables;
drafts, bills of exchange, acceptances, or notes arising out of
commercial transactions or in loans secured by bonds, mortgaged
on real estate and insured improvements thereon, and other forms
of security or in loans for personal or household finance,
whether secured or unsecured, and financing for home building and
home development; and in such other investments and loans
which the Monetary Board may determine as necessary in the
furtherance of national economic objectives: Provided, however,
That investments made and loans granted pursuant to the
provisions of this section shall be in conformity with such
regulations as the Monetary Board may prescribe. A savings and
mortgage bank may also issue a domestic letter of credit
denominated in Philippine currency in accordance with such
regulations as the Monetary Board may prescribe.
"Nothing in this section shall be
construed as precluding a savings and mortgage bank from
performing, with prior approval of the Monetary Board, commercial
banking services, or from operating under an expanded commercial
banking authority, nor from exercising, whenever applicable and
not inconsistent with the provisions of this Act and Central Bank
regulations, such other powers incident to a corporation.
"Notwithstanding any provision in any other Act to the contrary,
savings and mortgage banks may lend money against the security of
jewelry, precious stones and articles of similar nature, subject
to such rules and regulations as the Monetary Board may
prescribe."
Sec. 16. Sec. 31 of the same Act is hereby
further amended to read as follows:
"Sec. 31.
Savings and mortgage banks may invest in equities of allied
undertakings as may be approved by the Monetary Board for banks
of their category as provided under Sec. 6-A of this Act:
Provided, That (1) the total investment in equities shall not
exceed twenty-five percent (25%) of the net worth of the bank;
(2) the equity investment in any single enterprise shall not
exceed fifteen percent (15%) of the net worth of the bank; (3) the
total equity investment of the bank in any single enterprise
shall remain a minority holding in that enterprise, except where
the enterprise is a non-financial allied undertaking; and (4) the
equity investment in other banks shall be subject to the same
regulations governing similar investment of commercial banks and
shall be deducted from the investing bank's net worth for the
purposes of computing the prescribed ratio of net worth to risk
assets. Equity investments shall not be permitted in non-related
activities.
"Where the allied undertaking is a wholly or majority-owned
subsidiary of the bank, the Central Bank may subject it to
examination."
Sec. 17. Sec. 33 of the same Act is hereby
further amended to read as follows:
"Sec. 33.
Any savings and mortgage bank may, with the approval of the
Monetary Board, issue mortgage and chattel mortgage certificates,
buy and sell them for its own account or for the account of
others, or accept and receive them in payment or as amortization
of its loans.
"Such mortgage and chattel mortgage certificates shall be issued
exclusively in national currency and exclusively for the
financing of equipment loans, mortgage loans for the acquisition
of machinery and other fixed installations, conservation,
enlargement or improvement of productive properties, and real
estate mortgage loans (1) for the construction, acquisition,
expansion or improvement of rural and urban properties; (2) for
the refinancing of similar loans and mortgages; and (3) for
such other purposes as may be authorized by the Monetary Board.
The Monetary Board may issue such regulations as it deems
necessary with respect to the maturities, rates of interest,
denominations and other conditions pertaining to such
certificates.
"The bank shall coordinate the
amounts and maturities of its certificates with those of its
loans, so as to ensure adequate cash receipts for the payment of
principal and interest at the time they become due.
"Savings and mortgage banks shall accept their own certificates
at least at the actual price of issue, in any repayment of loans
which mortgage or chattel mortgage debtors may wish to make,
provided that the date of maturity of the certificates is not
later than the date on which the payment would otherwise become
due, in the absence of the aforesaid prepayment."
Sec. 18. Sec. 78 of the same Act is hereby
further amended to read as follows:
"Sec. 78.
Loans against real estate security shall not exceed seventy
percent (70%) of the appraised value of the respective real
estate security, plus seventy percent (70%) of the appraised
value of the insured improvements, and such loans shall not be
made unless title to the real estate shall be in the mortgagor.
In the event of foreclosure, whether judicially or
extrajudicially, of any mortgage on real estate which is security
for any loan granted before the passage of this Act or under the
provisions of this Act or under the provisions of this Act, the
mortgagor or debtor whose real property has been sold at public
auction, judicially or extrajudicially, for the full or partial
payment of an obligation to any bank, banking or credit
institution, within the purview of this Act shall have the right,
within one year after the sale of the real estate as a result of
the foreclosure of the respective mortgage, to redeem the
property by paying the amount fixed by the court in the order of
execution, with interest thereon at the rate specified in the
mortgage, and all the costs and other judicial expenses incurred
by the bank or institution concerned by reason of the execution
and sale and as a result of the custody of said property less the
income received from the property. However, the purchaser at the
auction sale concerned shall have the right to enter upon and take
possession of such property immediately after the date of the
confirmation of the auction sale and administer the same in
accordance with law.
"Similarly, loans on the security
of chattels shall not exceed fifty percent (50%) of the appraised
value of the security, and such loans shall not be made unless
title to the chattels, free from all encumbrances, shall be
in the mortgagor.
"The Monetary Board may, by
regulation, prescribe further security requirements to which the
various types of bank credit shall be subject, and in accordance
with the authority granted to it in Section one hundred eleven of
the Central Bank Act, the Board may by regulation reduce the
maximum ratios established in the present section, or, in special
cases, increase the maximum ratios established herein.
"The Monetary Board may, similarly, in accordance with the
authority granted to it in Section one hundred eleven of the
Central Bank Act, and taking into account the requirements of the
economy for the effective utilization of long-term funds,
prescribe the maturities, as well as related terms and conditions
for various types of bank loans. Any change by the Board in
the maximum maturities shall apply only to loans made after the
date of such action."
Sec. 19. This Act shall take effect upon its
approval.
Approved: April 1, 1980.
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