MALACAÑANG
M a n i l aPRESIDENTIAL DECREE No. 122 January 29, 1973
AMENDING CERTAIN SECTIONS OF REPUBLIC ACT NUMBERED SEVEN HUNDRED TWENTY, OTHERWISE KNOWN AS THE "RURAL BANKS' ACT"
WHEREAS, there were pending before Congress prior to the promulgation of Proclamation No. 1081, dated September 21, 1972, urgent banking measures proposing amendments to Republic Act No. 720, as amended, entitled "The Rural Banks' Act" which are essential to the national development program of the Government;
WHEREAS, an extensive survey and study of the banking and credit system had been undertaken for the purposes of assessing its adequacy in Philippine economic growth, and of facilitating the savings-investment process in development;
WHEREAS, the result of the survey was an integrated set of recommendations which were accepted, with modifications by the monetary authorities, and made the basis of this Decree to enable rural banks to service the credit needs of small farmers and merchants in rural communities more effectively;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers...
Details
Amends
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Amended by
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Presidential Decrees
Amending Certain Sections Of Republic Act Numbered Seven Hundred Twenty, Otherwise Known As The "Rural Banks' Act"
Presidential Decree No. 122
Summary of Presidential Decree No. 122 Amending the Rural Banks' Act
Ownership and Organization of Rural Banks
- Rural Banks shall be organized as stock corporations. (Section 1)
- 100% of the capital stock must be owned by Filipino citizens directly or indirectly. (Section 1)
- Cooperatives and corporations can organize and hold equity in Rural Banks within a defined region, subject to Monetary Board approval. (Section 1)
- If private subscription cannot be secured, the Development Bank of the Philippines can subscribe up to 1 million pesos, which can later be sold to private individuals. (Section 1)
- All members of the Board of Directors must be Filipino citizens, except for government representatives in cases of financial assistance. (Section 1)
Lending Operations
- Loans shall primarily cater to small farmers (up to 50 hectares), farm families, cooperatives, and small merchants (up to 50,000 pesos capital). (Section 5)
- Loans can be granted on various types of land without Torrens titles, subject to certain conditions. (Section 5)
- Foreclosure of mortgages up to 3,000 pesos can be published through local postings instead of newspapers. (Section 5)
- Homesteaders and free patent holders have the right to redeem foreclosed lands within 2 years. (Section 5)
- Rural Banks can also lend to small business enterprises (up to 50,000 pesos capital) and essential rural industries. (Section 6)
Capital and Equity Investment
- The Development Bank of the Philippines can subscribe up to 1 million pesos in a Rural Bank's capital stock to provide supplemental capital. (Section 7)
- The Development Bank's shares can be retired or replaced by private investors, with pre-emptive rights for existing shareholders. (Section 7)
- Rural Banks can invest up to 25% of their net worth in equity of allied undertakings, subject to Monetary Board approval. (Section 11-A)
Supervision and Regulation
- The Monetary Board of the Central Bank has the power to supervise Rural Banks' operations, including setting limits, prescribing rates, procedures, accounting systems, and conducting examinations. (Section 10)
- The Central Bank can take over the management of a Rural Bank if it is being mismanaged, after due hearing. (Section 10)
- Rural Banks may be required to contribute an annual fee up to 1/20 of 1% of average total assets to help defray the cost of supervision. (Section 18)
Lending and Borrowing from Central Bank
- In emergencies, the Central Bank can lend to Rural Banks against acceptable assets. (Section 13)
- In normal times, the Central Bank can rediscount Rural Bank loans with a maturity up to 360 days. (Section 13)
- Rural Banks can borrow medium or long-term funds from the Central Bank or other institutions for agricultural and industrial development programs. (Section 13)
Fees and Charges
- Municipal judges shall administer oaths and acknowledge instruments related to loans up to 5,000 pesos free of charge and stamp tax. (Section 16)
- Registers of deeds shall register instruments related to loans up to 5,000 pesos free of charge and stamp tax. (Section 17)
Other Provisions
- The provisions of Republic Act No. 265 and 337, as amended, are made part of this Act insofar as they are applicable and not in conflict. (Section 27)
Ownership and Organization of Rural Banks
- Rural Banks shall be organized as stock corporations. (Section 1)
- 100% of the capital stock must be owned by Filipino citizens directly or indirectly. (Section 1)
- Cooperatives and corporations can organize and hold equity in Rural Banks within a defined region, subject to Monetary Board approval. (Section 1)
- If private subscription cannot be secured, the Development Bank of the Philippines can subscribe up to 1 million pesos, which can later be sold to private individuals. (Section 1)
- All members of the Board of Directors must be Filipino citizens, except for government representatives in cases of financial assistance. (Section 1)
Lending Operations
- Loans shall primarily cater to small farmers (up to 50 hectares), farm families, cooperatives, and small merchants (up to 50,000 pesos capital). (Section 5)
- Loans can be granted on various types of land without Torrens titles, subject to certain conditions. (Section 5)
- Foreclosure of mortgages up to 3,000 pesos can be published through local postings instead of newspapers. (Section 5)
- Homesteaders and free patent holders have the right to redeem foreclosed lands within 2 years. (Section 5)
- Rural Banks can also lend to small business enterprises (up to 50,000 pesos capital) and essential rural industries. (Section 6)
Capital and Equity Investment
- The Development Bank of the Philippines can subscribe up to 1 million pesos in a Rural Bank's capital stock to provide supplemental capital. (Section 7)
- The Development Bank's shares can be retired or replaced by private investors, with pre-emptive rights for existing shareholders. (Section 7)
- Rural Banks can invest up to 25% of their net worth in equity of allied undertakings, subject to Monetary Board approval. (Section 11-A)
Supervision and Regulation
- The Monetary Board of the Central Bank has the power to supervise Rural Banks' operations, including setting limits, prescribing rates, procedures, accounting systems, and conducting examinations. (Section 10)
- The Central Bank can take over the management of a Rural Bank if it is being mismanaged, after due hearing. (Section 10)
- Rural Banks may be required to contribute an annual fee up to 1/20 of 1% of average total assets to help defray the cost of supervision. (Section 18)
Lending and Borrowing from Central Bank
- In emergencies, the Central Bank can lend to Rural Banks against acceptable assets. (Section 13)
- In normal times, the Central Bank can rediscount Rural Bank loans with a maturity up to 360 days. (Section 13)
- Rural Banks can borrow medium or long-term funds from the Central Bank or other institutions for agricultural and industrial development programs. (Section 13)
Fees and Charges
- Municipal judges shall administer oaths and acknowledge instruments related to loans up to 5,000 pesos free of charge and stamp tax. (Section 16)
- Registers of deeds shall register instruments related to loans up to 5,000 pesos free of charge and stamp tax. (Section 17)
Other Provisions
- The provisions of Republic Act No. 265 and 337, as amended, are made part of this Act insofar as they are applicable and not in conflict. (Section 27)