Amending Further Republic Act No. 337, As Amended, Otherwise Known As The "General Banking Act"

Case Overview and Summary

Summary:

Strengthening Central Bank's Supervisory and Regulatory Authority
- Allows Central Bank to impose limitations on total equity investments of banks, quasi-banks, and subsidiaries in any single non-allied enterprise or industry to avoid undue concentration of economic power. (Section 1)
- Requires entities owning or controlling majority voting stock of thrift banks and/or rural banks to submit reports and be subject to examinations to determine compliance. (Section 2)

Determining Total Assets and Liabilities
- Monetary Board to prescribe manner of determining total assets of banking institutions. (Sections 3, 5)
- Definition of "liabilities" includes direct liabilities, liabilities of co-partnerships/associations, and liabilities of subsidiaries owned/controlled by a corporation. Monetary Board may prescribe combination of liabilities under certain circumstances. (Sections 4, 7)

Indebtedness Limits and Loan Restrictions
- For savings and mortgage banks, direct indebtedness of any person/entity shall not exceed 15% of bank's unimpaired capital and surplus, excluding certain types of loans as specified. (Section 6)
- Discount of bills of exchange and commercial paper in good faith shall not be considered as money borrowed. (Sections 4, 7)
- Monetary Board may include certain types of contingent liabilities among total liabilities. (Sections 4, 7)

Deposits and Trust Companies
- Deposits to be returned to depositors or legal representatives as determined by the board of directors and in conformity with Monetary Board regulations. (Section 8)
- Lending or investment of deposits by trust companies as executors, administrators, guardians, receivers, trustees, or depositaries shall be limited to loans and investments prescribed by Monetary Board. Violation punishable by imprisonment of 1-10 years and fine of 1,000-10,000 pesos. (Section 9)

Credit Accommodations to Directors, Officers, and Stockholders
- Monetary Board may regulate credit accommodations extended by banking institutions to their directors, officers, or stockholders. (Section 10)
- Outstanding credit accommodations to stockholders owning 2% or more of subscribed capital stock, directors, or officers shall be limited to an amount equivalent to their respective outstanding deposits and book value of paid-in capital contribution, except for fringe benefits granted in accordance with Monetary Board rules. (Section 10)