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    Notes - General Banking Law

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    Jingle Bells
    The document summarizes key sections of the General Banking Law of 2000 (RA 8791) regarding the regulation of banks in the Philippines. It outlines the types of banks covered by the law, including universal banks, commercial banks, and foreign banks. It also describes the capital structure requirements for banks, the powers and operations of universal and commercial banks, restrictions on lending to prevent excessive risk, and provisions for appointing a conservator to manage an underperforming bank.

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    Notes - General Banking Law

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    Jingle Bells
    90 views4 pages
    The document summarizes key sections of the General Banking Law of 2000 (RA 8791) regarding the regulation of banks in the Philippines. It outlines the types of banks covered by the law, including universal banks, commercial banks, and foreign banks. It also describes the capital structure requirements for banks, the powers and operations of universal and commercial banks, restrictions on lending to prevent excessive risk, and provisions for appointing a conservator to manage an underperforming bank.

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    The document summarizes key sections of the General Banking Law of 2000 (RA 8791) regarding the regulation of banks in the Philippines. It outlines the types of banks covered by the law, including universal banks, commercial banks, and foreign banks. It also describes the capital structure requirements for banks, the powers and operations of universal and commercial banks, restrictions on lending to prevent excessive risk, and provisions for appointing a conservator to manage an underperforming bank.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Download as docx, pdf, or txt
    90 views4 pages

    Notes - General Banking Law

    Uploaded by

    Jingle Bells
    The document summarizes key sections of the General Banking Law of 2000 (RA 8791) regarding the regulation of banks in the Philippines. It outlines the types of banks covered by the law, including universal banks, commercial banks, and foreign banks. It also describes the capital structure requirements for banks, the powers and operations of universal and commercial banks, restrictions on lending to prevent excessive risk, and provisions for appointing a conservator to manage an underperforming bank.

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    of 4

    THE GENERAL BANKING LAW OF 2000

    RA 8791
    Highlighted Sections: 2,3,4,8,15,16,19,36,53,72,73

    NOTES
    A. Applicable Law to Banking Industry and Banks Covered.
     GBL covers:
    o Universal Banks
    o Commercial Banks
    o Foreign Banks
     Section 72. Transacting Business in the Philippines
     RA 7721 - Foreign Banks Liberalization Act – governs entry of
    foreign banks in PH through branches
     PD 1034 – Offshore Banking System Decree
     RA 10641 – allows full entry of foreign banks
     Section 2. Declaration of Policy
    o “The State recognizes the vital role of banks providing an environment conducive
    to the sustained development of the national economy and the fiduciary nature of
    banking that requires high standards of integrity and performance. In furtherance
    thereof, the State shall promote and maintain a stable and efficient banking and
    financial system that is globally competitive, dynamic and responsive to the
    demands of a developing economy.”
     Section 3. Definition & Classification of Banks
    o 3.1 – Banks are entities engaged in the lending of funds obtained in the form of
    deposits.
    o 3.2 – Banks are classified as
     (a) Universal banks;
     (b) Commercial banks;
     (c) Thrift banks, composed of:
     (i) Savings and mortgage banks,
     (ii) Stock savings and loan associations, and
     (iii) Private development banks, as defined in the Republic Act No.
    7906 (hereafter the "Thrift Banks Act");
     (d) Rural banks, as defined in Republic Act No. 73S3 (hereafter the "Rural
    Banks Act");
     (e) Cooperative banks, as defined in Republic Act No 6938 (hereafter the
    "Cooperative Code");
     (f) Islamic banks as defined in Republic Act No. 6848, otherwise known
    as the "Charter of Al Amanah Islamic Investment Bank of the Philippines";
    and
     (g) Other classifications of banks as determined by the Monetary Board of
    the Bangko Sentral ng Pilipinas.
     Authority of BSP
    o Section 4. Supervisory Powers.
    o Section 7. Examination by the Bangko Sentral.
     Bank Operations
    o Section 6. Authority to Engage in Banking & Quasi-Banking Functions.
     Acquired only after having the authority from BSP

    B. Capital Structures of Banks and Quasi Banks.


     Section 8. Organization.
    o Monetary Board approves w/ the ff. conditions:
     Entity is a stock corporation
     Its funds are obtained from the public, which shall mean twenty (20) or
    more persons (2-Da); and
     The minimum capital requirements prescribed by the Monetary Board for
    each category of banks are satisfied. (n)
     Section 9. Issuance of Stocks.
    o Monetary Board may issue guidelines
    o But banks are allowed to issue par value stocks only
     Section 16. Fit and Proper Rule.
    o Monetary Board shall prescribe, pass upon and review the qualifications and
    disqualifications of individuals elected or appointed bank directors or officers and
    disqualify those found unfit.

    C. Bank Deposits, Loans and Operations Including Universal, Commercial and Foreign
    Banks.
     Section 20. Bank Branches
    o Universal & Commercial banks – can set branches within & outside PH upon
    BSP’s approval
     SBL – Single Borrower’s Limit
    o Section 35. Limit on Loans, Credit Accommodations and Guarantees
     Should not exceed 20% of the bank’s net worth
     DOSRI; Bank Exposure Restriction
    o Section 36. Restriction on Bank Exposure to Directors, Officers,
    Stockholders and Their Related Interests.
     Section 53. Other Banking Services.
     Powers of Universal Banks
    o Section 23. Powers of a Universal Bank
     Powers of a corporate bank + powers of an investment house + power to
    invest in allied & non-allied enterprises
    o Section 24. Equity Investments of a Universal Bank.
     May invest in the equities of allied and non-allied enterprises
     Except as the Monetary Board may otherwise prescribe:
     total investment in equities of allied enterprises and non-allied
    enterprises shall not exceed 35% of the net worth of the bank;
     equity investment in any one enterprise, whether allied or non-
    allied, shall not exceed 25% of the net worth of the bank
     Powers of Commercial Banks
    o Section 29. Powers of a Commercial Bank.
     General corporate powers + those necessary in commercial banking
    o Section 30. Equity Investments of a Commercial Bank.
     invest only in the equities of allied enterprises
     Except as the Monetary Board may otherwise prescribe:
     total investment in equities of allied enterprises shall not exceed
    35% of the net worth of the bank;
     equity investment in any one enterprise shall not exceed 25% of
    the net worth of the bank.
     *Allied enterprise – a firm, other than the company itself or a subsidiary, which the
    investor has a significant interest, contingent or otherwise; determined by Monetary
    Board

    D. Placement Under conservatorship and Trust Operations


     The provisions of Sec. 29 and 30 of New Central Bank Act (RA7653, RA11211 as
    amended) shall govern the powers and duties of the conservator appointed.
     Section 29. Appointment of Conservator.
    o When a bank or quasi-bank is in a state of continuing inability or unwillingness to
    maintain a condition of liquidity deemed adequate to protect the interest of
    depositors and creditors
    o Monetary Board appoints a conservator
     take charge of the assets, liabilities, and the management thereof,
    reorganize the management, collect all monies and debts due said
    institution, and exercise all powers necessary to restore its viability
     conservator shall report and be responsible to the Monetary Board and
    shall have the power to overrule or revoke the actions of the previous
    management and board of directors of the bank or quasi-bank.
     Must be com competent and knowledgeable in bank operations and
    management
    o The conservatorship shall not exceed one (1) year.

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