REPUBLIC ACT NO. 8791 May 23, 2000
AN ACT PROVIDING FOR THE REGULATION OF THE ORGANIZATION AND OPERATIONS OF BANKS, QUASI-BANKS, TRUST ENTITIES AND FOR OTHER PURPOSES
CHAPTER I
TITLE AND CLASSIFICATION OF BANKSSection 1. Title. The short title of this Act shall be "The General Banking Law of 2000." (1a)
Section 2. Declaration Of Policy. - The State recognizes the vital role of banks providing an environment conducive to the sustained development of the national economy and the fiduciary nature of banking that requires high standards of integrity and performance. In furtherance thereof, the State shall promote and maintain a stable and efficient banking and financial system that is globally competitive, dynamic and responsive to the demands of a developing economy. (n)
Section 3. Definition and Classification of Banks. -
3.1. "Banks" shall refer to entities engaged in the lending of funds obtained in the form of deposits. (2a)
3.2. Banks shall be classified into:
(a) Universal banks;
(b) Commercial banks;
(c) Thrift banks, composed of:...
Details
Amends
n/a
Amended by
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Republic Acts
THE GENERAL BANKING LAW OF 2000
Republic Act No. 8791
Summary of Republic Act No. 8791 (The General Banking Law of 2000):
Declaration of Policy (Section 2):
- The State recognizes the vital role of banks and aims to promote a stable, efficient, globally competitive, and responsive banking system.
Definition and Classification of Banks (Section 3):
- Banks are entities engaged in lending funds obtained as deposits.
- Banks are classified into: universal banks, commercial banks, thrift banks (savings and mortgage banks, stock savings and loan associations, private development banks), rural banks, cooperative banks, Islamic banks, and other classifications determined by the Monetary Board.
Authority of the Bangko Sentral (Chapter II):
- The Bangko Sentral has supervisory powers over banks, quasi-banks, and trust entities (Section 4).
- The Monetary Board can prescribe ratios, ceilings, and limitations on bank accounts and practices (Section 5).
- No person or entity can engage in banking or quasi-banking functions without Bangko Sentral authority (Section 6).
- The Bangko Sentral can examine enterprises owned or controlled by banks (Section 7).
Organization, Management, and Administration of Banks, Quasi-Banks, and Trust Entities (Chapter III):
- The Monetary Board can authorize the organization of banks and quasi-banks subject to conditions (Section 8).
- The Monetary Board can prescribe rules on bank stock issuance (Section 9).
- Banks cannot purchase their own stock, except with Monetary Board approval (Section 10).
- Foreign individuals and non-bank corporations can own up to 40% of a domestic bank's voting stock (Section 11).
- Family groups and related interests must disclose transactions with banks (Sections 12-13).
- Banks need a certificate of authority from the Monetary Board to register articles of incorporation and by-laws (Section 14).
- Banks must have 5-15 directors, with 2 independent directors (Section 15).
- The Monetary Board can disqualify unfit bank directors or officers (Section 16).
- Compensation and benefits of bank directors and officers can be regulated by the Monetary Board in certain cases (Section 18).
- Public officials cannot serve as bank officers, except in certain cases (Section 19).
- Banks can open branches with Bangko Sentral approval (Section 20).
- Banks must transact business for at least 6 hours daily on working days (Section 21).
- Strikes or lockouts in banks unsettled after 7 days can be resolved by the Secretary of Labor (Section 22).
Deposits, Loans, and Other Operations (Chapter IV):
- Universal banks have additional powers, including investment house powers and equity investments in allied and non-allied enterprises (Sections 23-28).
- Commercial banks have powers like accepting deposits, issuing letters of credit, and extending credit (Section 29).
- Commercial banks can invest in allied enterprises, subject to limits (Sections 30-32).
- Provisions on demand deposits, risk-based capital, loan limits, related party transactions, real estate loans, and other operations apply to all banks, quasi-banks, and trust entities (Sections 33-59).
- Banks cannot act as insurers or engage in prohibited transactions like false entries, disclosure of confidential information, or accepting gifts for loan approvals (Sections 54-55).
- The Monetary Board can determine if a bank is conducting business in an unsafe or unsound manner (Section 56).
- Banks cannot declare dividends in certain cases, like overdraft or liquidity deficiency (Section 57).
- Banks must engage independent auditors and submit financial statements to the Bangko Sentral (Sections 58-62).
- The Bangko Sentral can regulate electronic transactions and charge fees for services (Sections 59, 65).
- Violations are subject to penalties, including suspension or removal of directors or officers (Section 66).
Placement Under Conservatorship (Chapter V):
- The grounds and procedures for placing a bank under conservatorship are governed by the New Central Bank Act (Section 67).
Cessation of Banking Business (Chapter VI):
- Voluntary liquidation requires notice to the Monetary Board (Section 68).
- Receivership and involuntary liquidation are governed by the New Central Bank Act (Section 69).
- Penalties apply for transactions after a bank becomes insolvent (Section 70).
Laws Governing Other Types of Banks (Chapter VII):
- Thrift banks, rural banks, and cooperative banks are governed by their respective laws, but certain provisions of this Act also apply (Section 71).
Foreign Banks (Chapter VIII):
- The entry of foreign banks through branches is governed by the Foreign Banks Liberalization Act (Section 72).
- Foreign banks can acquire up to 100% of voting stock in one domestic bank, subject to conditions (Section 73).
- Provisions on head office guarantee, legal process, and revocation of license apply to foreign banks (Sections 74-78).
Trust Operations (Chapter IX):
- Only authorized entities can engage in trust business (Section 79).
- Trust entities must administer funds with diligence and follow restrictions on transactions with related parties (Section 80).
- Trust entities need a certificate of authority from the Bangko Sentral to register articles of incorporation and by-laws (Section 81).
- Trust entities must meet minimum paid-in capital requirements (Section 82).
- Powers of trust entities include acting as trustees, executors, administrators, and managing common trust funds (Section 83).
- Trust entities must deposit cash or securities with the Bangko Sentral as security for faithful performance (Section 84).
- Provisions on bonds for court-appointed trustees, separation of trust business, investment limitations, real estate acquisitions, and exemption of trust assets from claims (Sections 85-92).
- Trust entities can establish branches with Bangko Sentral approval (Section 93).
Final Provisions (Chapter X):
- The Bangko Sentral will phase out its powers over building and loan associations within 3 years (Section 94).
- Repealing and separability clauses (Sections 95-96).
- Effectivity clause: The Act takes effect 15 days after publication in the Official Gazette or two national newspapers (Section 97).
Declaration of Policy (Section 2):
- The State recognizes the vital role of banks and aims to promote a stable, efficient, globally competitive, and responsive banking system.
Definition and Classification of Banks (Section 3):
- Banks are entities engaged in lending funds obtained as deposits.
- Banks are classified into: universal banks, commercial banks, thrift banks (savings and mortgage banks, stock savings and loan associations, private development banks), rural banks, cooperative banks, Islamic banks, and other classifications determined by the Monetary Board.
Authority of the Bangko Sentral (Chapter II):
- The Bangko Sentral has supervisory powers over banks, quasi-banks, and trust entities (Section 4).
- The Monetary Board can prescribe ratios, ceilings, and limitations on bank accounts and practices (Section 5).
- No person or entity can engage in banking or quasi-banking functions without Bangko Sentral authority (Section 6).
- The Bangko Sentral can examine enterprises owned or controlled by banks (Section 7).
Organization, Management, and Administration of Banks, Quasi-Banks, and Trust Entities (Chapter III):
- The Monetary Board can authorize the organization of banks and quasi-banks subject to conditions (Section 8).
- The Monetary Board can prescribe rules on bank stock issuance (Section 9).
- Banks cannot purchase their own stock, except with Monetary Board approval (Section 10).
- Foreign individuals and non-bank corporations can own up to 40% of a domestic bank's voting stock (Section 11).
- Family groups and related interests must disclose transactions with banks (Sections 12-13).
- Banks need a certificate of authority from the Monetary Board to register articles of incorporation and by-laws (Section 14).
- Banks must have 5-15 directors, with 2 independent directors (Section 15).
- The Monetary Board can disqualify unfit bank directors or officers (Section 16).
- Compensation and benefits of bank directors and officers can be regulated by the Monetary Board in certain cases (Section 18).
- Public officials cannot serve as bank officers, except in certain cases (Section 19).
- Banks can open branches with Bangko Sentral approval (Section 20).
- Banks must transact business for at least 6 hours daily on working days (Section 21).
- Strikes or lockouts in banks unsettled after 7 days can be resolved by the Secretary of Labor (Section 22).
Deposits, Loans, and Other Operations (Chapter IV):
- Universal banks have additional powers, including investment house powers and equity investments in allied and non-allied enterprises (Sections 23-28).
- Commercial banks have powers like accepting deposits, issuing letters of credit, and extending credit (Section 29).
- Commercial banks can invest in allied enterprises, subject to limits (Sections 30-32).
- Provisions on demand deposits, risk-based capital, loan limits, related party transactions, real estate loans, and other operations apply to all banks, quasi-banks, and trust entities (Sections 33-59).
- Banks cannot act as insurers or engage in prohibited transactions like false entries, disclosure of confidential information, or accepting gifts for loan approvals (Sections 54-55).
- The Monetary Board can determine if a bank is conducting business in an unsafe or unsound manner (Section 56).
- Banks cannot declare dividends in certain cases, like overdraft or liquidity deficiency (Section 57).
- Banks must engage independent auditors and submit financial statements to the Bangko Sentral (Sections 58-62).
- The Bangko Sentral can regulate electronic transactions and charge fees for services (Sections 59, 65).
- Violations are subject to penalties, including suspension or removal of directors or officers (Section 66).
Placement Under Conservatorship (Chapter V):
- The grounds and procedures for placing a bank under conservatorship are governed by the New Central Bank Act (Section 67).
Cessation of Banking Business (Chapter VI):
- Voluntary liquidation requires notice to the Monetary Board (Section 68).
- Receivership and involuntary liquidation are governed by the New Central Bank Act (Section 69).
- Penalties apply for transactions after a bank becomes insolvent (Section 70).
Laws Governing Other Types of Banks (Chapter VII):
- Thrift banks, rural banks, and cooperative banks are governed by their respective laws, but certain provisions of this Act also apply (Section 71).
Foreign Banks (Chapter VIII):
- The entry of foreign banks through branches is governed by the Foreign Banks Liberalization Act (Section 72).
- Foreign banks can acquire up to 100% of voting stock in one domestic bank, subject to conditions (Section 73).
- Provisions on head office guarantee, legal process, and revocation of license apply to foreign banks (Sections 74-78).
Trust Operations (Chapter IX):
- Only authorized entities can engage in trust business (Section 79).
- Trust entities must administer funds with diligence and follow restrictions on transactions with related parties (Section 80).
- Trust entities need a certificate of authority from the Bangko Sentral to register articles of incorporation and by-laws (Section 81).
- Trust entities must meet minimum paid-in capital requirements (Section 82).
- Powers of trust entities include acting as trustees, executors, administrators, and managing common trust funds (Section 83).
- Trust entities must deposit cash or securities with the Bangko Sentral as security for faithful performance (Section 84).
- Provisions on bonds for court-appointed trustees, separation of trust business, investment limitations, real estate acquisitions, and exemption of trust assets from claims (Sections 85-92).
- Trust entities can establish branches with Bangko Sentral approval (Section 93).
Final Provisions (Chapter X):
- The Bangko Sentral will phase out its powers over building and loan associations within 3 years (Section 94).
- Repealing and separability clauses (Sections 95-96).
- Effectivity clause: The Act takes effect 15 days after publication in the Official Gazette or two national newspapers (Section 97).