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

Case Overview and Summary

SUMMARY OF PRESIDENTIAL DECREE NO. 1317

Amending the General Banking Act (Republic Act No. 337)

- Defines a commercial bank as a corporation primarily organized for accepting demand deposits and performing banking functions (Section 1)
- Allows banks to grant:
    • Clean loans for personal and household finance up to the borrower's savings, time deposits, and 4 months' salary/income (Section 2)
    • Loans for personal and household finance secured by real estate or chattel mortgage, up to 10% of the bank's total assets (Section 2)
- Provisions for different types of loans:
    • Livestock loans with maturities up to 3 years, secured by a lien on the animals, and up to 50% of their commercial value (Section 3(b)(1))
    • Equipment loans with maturities up to 5 years, secured by a lien on the acquired assets (Section 3(b)(2))
    • Agricultural input loans secured by chattel mortgage on crops or other collateral (Section 3(b)(3))
    • Loans secured by high-grade bonds, commercial papers, and accounts receivable (Section 4)
    • Other loans determined by the Monetary Board as necessary for national economic objectives (Section 5)
- Limits a borrower's indebtedness to a savings and mortgage bank to 15% of the bank's unimpaired capital and surplus, with exceptions (Section 6)
- Allows non-commercial banks to accept demand deposits subject to Monetary Board approval (Section 7)
- Limits real estate loans to 70% of the appraised value of the property and improvements (Section 8)
- Allows borrowers to redeem foreclosed property within 1 year by paying the amount fixed by the court, interest, and costs (Section 8)
- Authorizes the Monetary Board to prescribe further security requirements, reduce maximum loan ratios and maturities, and increase maximum ratios in special cases (Section 8)