An Act Allowing the Infusion of Foreign Equity in the Capital of Rural Banks, Amending Republic Act No. 7353, Otherwise Known as "The Rural Bank Act of 1992?, as Amended, and for Other Purposes
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An Act Allowing the Infusion of Foreign Equity in the Capital of Rural Banks, Amending Republic Act No. 7353, Otherwise Known as "The Rural Bank Act of 1992?, as Amended, and for Other Purposes
Republic Act No. 10574
May 24, 2013
Case Overview and Summary
Summary of Republic Act No. 10574Allowing Foreign Equity in Rural Banks
- Non-Filipino citizens may own up to 60% of the voting stocks in a rural bank. (Section 1)
- Non-Filipino citizens may become members of the Board of Directors, but their participation shall be limited to their proportionate share in the equity. At least one independent director shall be elected. (Section 2)
- The Monetary Board may regulate the amount of credit accommodations that may be extended to directors, officers, or stockholders of rural banks. Outstanding credit accommodations to stockholders owning 2% or more shall be limited to an amount equivalent to their outstanding deposits and paid-in capital contributions. (Section 2)
Loans and Foreclosure
- Loans by rural banks shall primarily meet the credit needs of farmers, fishermen, farm families, cooperatives, and merchants. (Section 3)
- Loans may be granted on the security of lands without Torrens Title, provided the owner can show at least 5 years of peaceful, continuous, and uninterrupted possession. (Section 3)
- Foreclosure of mortgages and execution of judgments involving real properties levied by a sheriff shall be exempt from newspaper publication requirements if the total loan amount, excluding interest, does not exceed ₱100,000 or such amount prescribed by the Monetary Board. (Section 3)
- Rural banks shall be allowed to foreclose lands mortgaged to them, including lands covered by the Comprehensive Agrarian Reform Law, subject to retention limits. (Section 3)
- Non-qualified rural banks may bid and take possession of foreclosed mortgaged property for up to 5 years, but cannot transfer title to themselves. (Section 3)
Government Financial Institutions' Equity
- The Land Bank of the Philippines, Development Bank of the Philippines, or any government-owned or -controlled bank or financial institution shall subscribe to the capital stock of any rural bank in an amount equal to the total equity investment of the private shareholders or as necessary to promote rural economic development. (Section 4)
- Stocks held by government financial institutions shall be preferred as to assets upon liquidation, without voting power, and shall share in dividend distributions based on the lending benchmark approved by the Bangko Sentral ng Pilipinas plus the prevailing non-prime spread of the government financial institution. (Section 4)
- If preferred stocks held by government financial institutions are sold to private shareholders, they may be converted into common stocks. (Section 4)
Implementation
- The Bangko Sentral ng Pilipinas shall prescribe the necessary rules and regulations in consultation with stakeholders and disseminate information to allow entry of foreign equity into the rural bank system within 90 days from the publication of this Act. (Section 5)
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An Act Allowing the Infusion of Foreign Equity in the Capital of Rural Banks, Amending Republic Act No. 7353, Otherwise Known as "The Rural Bank Act of 1992?, as Amended, and for Other Purposes
Republic Act No. 10574
•May 24, 2013
Republic of the PhilippinesCONGRESS OF THE PHILIPPINESMetro Manila
Fifteenth CongressThird Regular Session
Begun and held in Metro Manila, on Monday, the twenty-third day of July, two thousand twelve.
REPUBLIC ACT No. 10574
AN ACT ALLOWING THE INFUSION OF FOREIGN EQUITY IN THE CAPITAL OF RURAL BANKS, AMENDING REPUBLIC ACT NO. 7353, OTHERWISE KNOWN AS "THE RURAL BANK ACT OF 1992″, AS AMENDED, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:
Section 1. Section 4 of Republic Act No. 7353, as amended, is hereby amended to read as follows:
"SEC. 4. No rural bank shall be operated without a Certificate of Authority from the Monetary Board of the Bangko Sentral ng Pilipinas. Rural banks shall be organized in the form of stock corporations. No less than forty percent (40%) of the voting stocks of a rural bank shall be owned by citizens of the Philippines or corporations or associations organized under the laws of the Philippines at least sixty percent (60%) of whose capital...
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