GENERAL BANKING LAW

RA 8791

Classification of Banks
Section 3. 3.2. Banks shall be classified into: (a) Universal banks; (b) Commercial banks; (c) Thrift banks; (d) Rural banks; (e) Cooperative banks; (f) Islamic banks; and (g) Other classifications of banks as determined by the Monetary Board of the Bangko Sentral ng Pilipinas. CUT-RICO

COMMERCIAL BANK
Apart from its general powers as a stock corporation, it can: a.) exercise all the powers specified in Sec. 29; b.) provide the other banking services; and c.) purchase, hold, and convey real estate. d.) invest in the equities of allied enterprises

Section 29
A commercial bank shall have, in addition to the general powers incident to corporations, all such powers as may be necessary to carry on the business of commercial banking the following: a.) accepts or creates demand deposits subject to withdrawal by check and primarily organized to carry on the business of accepting drafts and issuing letters of credit, discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debts; b.) receiving deposits;

c.) buying and selling foreign exchange and gold or silver bullion, and lending money against personal security or against securities consisting of personal property or mortgages on improved real estate and the insured improvements thereon.


OTHER BANKING SERVICES -Receive in custody funds, documents and valuable objects; -Act as financial agent and buy and sell, by order of and for the account of their customers, shares, evidences of indebtedness and all types of securities;

-Make collections and payments for the account of others and perform such other services for their customers as are not incompatible with banking business; -Upon prior approval of the Monetary Board, act as managing agent, adviser, consultant or administrator of investment management/advisory/consultancy accounts; and -Rent out safety deposit boxes.

LIMITATION
The individual borrower can borrow a credit not exceeding 15% of the unimpaired capital and surplus of such bank. It can be increased to another 15% provided the additional liabilities are adequately secured by shipping documents, warehouse receipts or other similar documents transferring or

securing title covering readily marketable, non-perishable staples, which staples must be fully covered by insurance, and must have a market value equal to at least 125% of such additional liabilities.

UNIVERSAL BANKS
In addition to the powers of a commercial bank, a universal bank can exercise the powers of an investment house either DIRECTLY (through a separate and distinct department or unit within the bank) or INDIRECTLY (through a separate subsidiary investment house). It CANNOT perform those functions both directly AND indirectly. In either case, the underwriting of equity securities and securities dealing will be subject to pertinent laws, as well as applicable regulations of SEC.

THRIFT BANKS
A thrift bank is divided into 3 different classes, namely: 1.) savings and mortgage banks; 2.) stock savings and loan associations; and 3.) private development bank

a. Savings and Mortgage Banks

It is a corporation organized for the purpose of accumulating the savings of small depositors and make them available to the borrower, together with the other funds in its possession.

b. Stock savings and loan associations

Any corporation engaged in the business for accumulating the savings of its members or stockholders, and using such accumulations, together with its capital in the case of a stock corporation, for loans and/or for investment in the securities of productive enterprises or in securities of the Government, or any of its political subdivisions, instrumentalities or corporations: Provided, That they shall be primarily engaged in servicing the needs of households by providing personal finance and long-term financing for home building and development.

c. Private Development Bank

A group of quasi-private development banks promoted by the Development Bank of the Philippines to provide medium and long term credits to both the agricultural and industrial sectors. Designed to supplement the short-term credits of the rural banks, they are classified as mortgage banks and are able to accept only savings and time deposits.

RURAL BANKS
These are governmentsponsored/assisted banks which are privately managed and largely privately owned that provide credit facilities to farmers and merchants, or to cooperatives of such farmers or merchants at reasonable terms and in general, to the people of the rural community.

If authorized by the Monetary Board, a rural bank can provide the following services: a.) accept current or checking accounts, provided that such rural bank has net assets of at least 5 Million Pesos; b.) accept Negotiable Order of Withdrawal (NOW) accounts; c.) act as trustee over estates or properties of farmers or merchants;

d.) act as official depository of municipal, city or provincial funds in the municipality, city, or province where it is located; e.) sell domestic drafts; and f.) invest in allied undertakings

ISLAMIC BANKS
REPUBLIC ACT 6848 All business dealings and activities of the Islamic Bank shall be subject to the basic principles and rulings of Islamic Shari'a within the purview of the aforementioned declared policy. Any zakat or "ithe" paid by the Islamic Bank on behalf of its shareholders and depositors shall be its obligation to appropriate said zakat fund and to disburse it in legitimate channels to be ascertained first by the Shari'a Advisory Council.

 that there is only one Islamic Bank in the Philippines? The Bangko Sentral recognizes only one bank, namely owned by the National Government, the SSS, GSIS, DBP and the Privatization and Management Office.

COOPERATIVE BANKS
Organized primarily to provide financial and credit services to cooperatives. It may perform any or all of the services offered by a rural bank.

OTHER BANKS
The Monetary Bank is authorized to make other classifications of banks, as it may deem proper. i.e. Development Bank of the Philippines and the Land Bank of the Philippines are classified, though not under the new law, as Specialized and unique government banks subject to the supervision and regulation of Bangko Sentral.

What is a quasi bank?

REPUBLIC ACT NO. 9474
Enacted: May 22, 2007

a non-bank financial institution authorized by the BSP to engage in quasibanking functions and to borrow funds from more than nineteen (19) lenders through the issuance, endorsement or assignment with recourse or acceptance of deposit substitutes

Sec. 2-D (b) of PD 71 (1972) 2Quasi-Banking Functions shall mean borrowing funds, for the borrower's own account, through the issuance, endorsement or acceptance of debt instruments of any kind other than deposits, or through the issuance of participations, certificates of assignment, or similar instruments with recourse, trust certificates, or of repurchase agreements, from twenty or more lenders at any one time, for purposes of relending or purchasing of receivables and other obligations: Provided, however, That commercial, industrial, and other non-financial companies, which borrow funds through any of these means for the limited purpose of financing their own needs or the needs of their agents or dealers, shall not be considered as performing quasi-banking functions;