RA 7906 or THRIFT BANKS ACT OF 1995
Applicable Laws to Thrift Banks
- RA 7906 specifically
- Central Bank Act and General Banking Law when not in conflict (Banko Sentral is supervising agency)
- Corporation Code in general
State Policies and Rationale of the RA 7906
- To stimulate economic growth, by providing incentives like rural banks, by lifting certain restrictions
imposed on savings and mortgage banks and loan associations, consistent with the policy to assist
crucial sectors (agriculture and industry) by providing credit facilities to entrepreneurs
- To provide small entrepreneurs with short to long term credit at reasonable costs, to foster targeted
economic activity, and to eliminate five-six financing
Definition
- "Thrift banks" shall include savings and mortgage banks, private development banks, and stock savings
and loans associations organized under existing laws, and any banking corporation that may be
organized for the following purposes:
(1) Accumulating the savings of depositors and investing them, together with capital in (a) loans; (b)
home financing; (c) in readily marketable and debt securities; (d) in commercial papers; and in such
other investments and loans
(2) Providing short-term working capital, medium- and long-term financing, to businesses engaged in
agriculture, services, industry and housing; and
(3) Providing diversified financial and allied services for its chosen mark
Organization
- stock corporation
- with certificate of authority from the Monetary Board
- to issue par value stocks
Minimum Capitalization
- head office in Metro Manila: P1 billion
- head office in Cebu and Davao: P500 million
- head office elsewhere: P250 million
Required capitalization may be increased to secure special banking authority
- Quasi-banking functions
- Trust and other fiduciary business
- Limited trusts
- Foreign currency deposit unit/expanded foreign currency deposit unit
- lssuance of foreign letters of credit (LCs)
- Acceptance of demand deposit and NOW accounts
- Acting as third party securities custodian/registry
Establishment with the SEC
- AOI shall not be approved by the SEC unless the MB issues a certificate of authority:
(a) all rules and regulations have been complied with;
(b) that public interest and the economic conditions, both general and local, justify the authorization;
and
(c) that the amount of capital, the financing organization, direction and administration, as well as the
integrity and the responsibility of the organizers and administrators reasonably assure the safety of the
interest which the public may entrust to them.
- By Laws shall not be approved unless MB also issues a certificate of authority that it is in accordance
with law
- By Laws shall include provisions that meetings are to be held in the Philippines, the profit-sharing
programs of directors, employees, and officers; and the creation of the position of internal auditor
- Effect of non-registration, persons responsible shall be treated as general partners and may be liable
under Sec. 36 of the New Central Bank Act (operating without authority).
MB shall pass upon the review and qualifications of persons who are appointed bank officers
- Fit and Proper Rule
- integrity or probity, competence, relevant education/training (e.g., financial literacy), physical and
mental fitness, diligence, and knowledge or experience
Directors and Officers
- majority: Filipinos
- no elective and appointive officials may serve except in cases where such service is incident to financial
assistance provided by the government or a government-owned or -controlled corporation to the bank
- directors: 5-15, except merger or consolidation: 21
Ownership and Capital Requirement s
- liberalize entry of foreign banks
- General Rule: 40% of voting stock at least Filipino
- Exception: merger and consolidation of thrift banks into a new one such that the resulting foreign
holdings shall not be increased but may be reduced and once reduced, shall not be increased thereafter
beyond 60%.
