REPUBLIC ACT NO. 7906 .

household finance, whether secured or unsecured, or in

AN ACT PROVIDING FOR THE REGULATION OF THE financing for homebuilding and home development; in
ORGANIZATION AND OPERATIONS OF THRIFT BANKS, readily marketable and debt securities; in commercial
AND FOR OTHER PURPOSES. CHAPTER I DECLARATION papers and accounts receivables, drafts, bills of
OF POLICY AND DEFINITIONS exchange, acceptances or notes arising out of
Section 1. Title. — This Act shall be known and cited as commercial transactions; and in such other investments
the "Thrift Banks Act of 1995." and loans which the Monetary Board may determine as
Sec. 2. Declaration of Policy. — It is hereby declared necessary in the furtherance of national economic
the policy of the State to: objectives;
a) Recognize the indispensable role of the private (2) Providing short-term working capital, medium- and
sector, to encourage private enterprise, and to long-term financing, to businesses engaged in
provide incentives to needed investments; agriculture, services, industry and housing; and
b) Promote economic development pursuant to (3) Providing diversified financial and allied services for
the socioeconomic program of the government, its chosen market and constituencies specially for small
to expand industrial and agricultural growth, to and medium enterprises and individuals.
encourage the establishment of more private b) "Monetary Board" shall mean the Monetary
thrift banks in order to meet the needs for Board of the Bangko Sentral ng Pilipinas.
capital, personal and investment credit or c) "Bangko Sentral" shall refer to the Bangko
medium- and long-term loans for Filipino Sentral ng Pilipinas created under Republic Act
entrepreneurs; No. 7653.
c) Encourage and assist the establishment of thrift CHAPTER II ORGANIZATION
bank system which will promote agriculture and Sec. 4. Organization.
industry and at the same time place within easy — A thrift bank shall be organized in the form of stock
reach of the people the medium-and long-term corporation. The Monetary Board shall fix the minimum
credit facilities at reasonable cost; paid-up capital of thrift banks in such amount as the
d) Encourage industry, frugality and the Board may consider necessary for the safe and sound
accumulation of savings among the public, and operation of thrift banks taking into account the
the members and stockholders of thrift banks; development thrusts of this Act and due protection of
and the general public. No thrift bank shall be organized
e) Regulate and supervise the activities of thrift without a certificate of authority from the Monetary
banks in order to place their operations on a Board.
sound, stable and efficient basis and to curtail or Sec. 5. Establishment of Thrift Banks.
prevent acts or practices which are prejudicial — The articles of incorporation of any bank, or any
to the public interest. amendment thereto, shall not be registered by the
Sec. 3. Definition of Terms. Securities and Exchange Commission unless
— For purposes of implementing this Act, the following accompanied by a certificate of authority issued by the
definitions shall apply: Monetary Board under its official seal .Such certificate
a. "Thrift banks" shall include savings and shall not be issued unless the Monetary Board is
mortgage banks, private development satisfied from the evidence submitted to it:
banks, and stock savings and loans a. that all the requirements of the existing
associations organized under existing laws and regulations to engage in
laws, and any banking corporation that business for which the applicant is
may be organized for the following proposed to be incorporated have been
purposes: complied with;
(1) Accumulating the savings of depositors and b. that public interest and the economic
investing them, together with capital loans secured by conditions, both general and local,
bonds, mortgages in real estate and insured justify the authorization; and
improvements thereon, chattel mortgage, bonds and c. that the amount of capital, the financing
other forms of security or in loans for personal or organization, direction and
 administration, as well as the integrity once reduced, shall not be increased thereafter beyond
and the responsibility of the organizers sixty percent (60%) of the voting stock of thrift banks.
and administrators reasonably assure The percentage of the foreign-owned voting stocks shall
the safety of the interest which the be determined by the citizenship of individual
public may entrust to them. The by-laws stockholders and in case of corporations owning shares,
of any thrift bank, or any amendment by the citizenship of each stockholder in the said
thereto, shall not be registered by the corporations. Any provision of existing laws to the
Securities and Exchange Commission contrary notwithstanding, stockholdings in a thrift bank
unless accompanied by a certificate of shall be exempt from any ownership ceiling for a period
the Monetary Board to the effect that of ten (10) years from the effectivity of this Act.
such by-laws or amendments thereto Sec. 9. Combined Capital Accounts of Thrift Banks. —
are in accordance with law. The combined capital accounts of each thrift bank shall
Sec. 6. Bank Management. not be less than an amount equal to ten percent (10%)
— In order to maintain the quality of bank of its risk assets which is defined as its total assets
management and afford better protection to depositors minus the following assets:
and the public in general, the Monetary Board may pass a. Cash on hand;
upon and review the qualifications of persons who are b. Amounts from the Bangko Sentral;
elected or appointed bank directors and officers and c. Evidences of indebtedness of the
disqualify those unfit. The Monetary Board shall Republic of the Philippines and of the
prescribe the qualifications of bank directors and Bangko Sentral, and any other
officers for purposes of this Section. evidences of indebtedness or
Sec. 7. Directors and Officers. obligations the servicing and repayment
— At least a majority of the members of the board of of which are fully guaranteed by the
directors of any thrift bank which may be established Republic of the Philippines;
after the effectivity of this Act shall be citizens of the d. Loans to the extent covered by hold-out
Philippines: Provided, however, That no appointive or on, or assignment of deposits
elective official, whether full-time or part-time, shall at maintained in the lending bank and held
the same time serve as officer of any thrift bank, except in the Philippines; and
in cases where such service is incident to financial (e) Other non-risk items as the Monetary Board
assistance provided by the government or a may, from time to time, authorize to be
government-owned or -controlled corporation to the deducted from total assets. The Monetary
bank: Provided, further, That in the case of merger or Board shall prescribe the manner of
consolidation duly approved by the Monetary Board, determining the total assets of banking
the limitation on the number of directors in a institutions for purposes of this Section.
corporation, as provided in Section 14 of the Whenever the capital accounts of a bank are
Corporation Code of the Philippines, shall not be applied deficient with respect to the requirements of
so that membership in the new board may include up to the preceding paragraph, the Monetary Board,
the total number of directors provided for in the after considering the report of the appropriate
respective articles of incorporation of the merging or supervising department on the state of solvency
consolidating banks. of the institution, shall limit or prohibit the
CHAPTER III OWNERSHIP AND CAPITAL REQUIREMENTS distribution of net profits and shall require that
Sec. 8. Ownership. part or all of net profits be used to increase the
— At least forty percent (40%) of the voting stock of a capital accounts of the institution until the
thrift bank which may be established after the approval minimum requirement has been met.The
of this Act shall be owned by citizens of the Philippines, Monetary Board may, after considering the
except where a new bank may be established as a result aforesaid report of the appropriate supervising
of a merger or consolidation of existing thrift banks with department and if the amount of the deficiency
foreign holdings in which case, the resulting foreign justifies it, restrict or prohibit the making of new
holdings shall not be increased but may be reduced and, investments of any sort by the bank, with the
exception of purchases of evidences of rediscount, as well as rediscounting rate
indebtedness included under subsection (c) of to be charged by any of these
this Section, until the minimum required capital institutions; and
ratio has been restored. Where in the process of g) Issue mortgage and chattel mortgage
a bank merger or consolidation, the merged or certificates, buy and sell them for its
constituent bank may not be able to comply own account or for the account of
fully with the net worth to risk asset ratio herein others, or accept and receive them in
prescribed, the Monetary Board may, at its payment or as amortization of its loan.
discretion, temporarily relieve the bank from Such mortgage and chattel mortgage
full compliance with this requirement under certificates shall be issued exclusively in
such conditions it may prescribe. national currency and exclusively for the
financing of equipment loans, mortgage
CHAPTER IV POWERS loans for the acquisition of machinery
and other fixed installations,
Sec. 10. Powers of Thrift Banks. conservation, enlargement or
improvement of productive properties
— In addition to powers granted it by this Act and real estate mortgage loans for:
and existing laws, any thrift bank may: a. the construction, acquisition,
a) Accept savings and time deposits; expansion or improvement of
b) Open current or checking accounts: rural and urban properties;
Provided, That the thrift bank has net b. the refinancing of similar loans
assets of at least Twenty million pesos and mortgages; and
(P20,000,000) subject to such guidelines c. such other purposes as may be
as may be established by the Monetary authorized by the Monetary
Board; and shall be allowed to directly Board. A thrift bank shall
clear its demand deposit operations coordinate the amounts and
with the Bangko Sentral and the maturities of its certificates with
Philippine Clearing House Corporation; those of its loans, so as to
c) Act as correspondent for other financial ensure adequate cash receipts
institutions; for the payment of principal and
d) Act as collection agent for government interest at the time they
entities, including but not limited to, the become due. The bank shall
Bureau of Internal Revenue, Social accept its own certificates at
Security System, and the Bureau of least at the actual price of issue,
Customs; in any prepayment of loans
e) Act as official depository of national which mortgage or chattel
agencies and of municipal, city or mortgage debtors may wish to
provincial funds in the municipality, city make: Provided, That the date
or province where the thrift bank is of maturity of the certificates is
located, subject to such guidelines as not later than the date on
may be established by the Monetary which the payment would
Board; otherwise become due, in the
f) Rediscount paper with the Philippine absence of the aforesaid
National Bank, the Land Bank of the prepayment; (h) Purchase, hold
Philippines, the Development Bank of and convey real estate under
the Philippines, and other government- the same conditions as those
owned or -controlled corporations. Said governing commercial banks as
institutions shall specify the nature of specified under Section 25 of
paper deemed acceptable for Republic Act No. 337;
 h) Engage in quasi-banking and money (a) loans secured by obligations of the Bangko
market operations; Sentral;
i) Open domestic letters of credit; (b) loans fully guaranteed by the government
j) Extend credit facilities to private and as to the payment of principal and interest;
government employees: Provided, That (c) loans to the extent covered by the hold-out
in the case of a borrower who is a on, or assignment of, deposits maintained in
permanent employee or wage earner, the lending bank and held in the
the treasurer, cashier or paymaster of Philippines; and
the office employing him is authorized, (d) other loans or credits as the Monetary
notwithstanding the provisions of any Board may, from time to time, specify as
existing law, rules and regulations to the non-risk assets, which shall in no time
contrary, to make deductions from his exceed fifteen percent (15%) of unimpaired
salary, wage or income pursuant to the capital and surplus of the bank.
terms of his loan, to remit deductions to Notwithstanding the provisions of the
the thrift bank concerned, and collect preceding paragraph and subject to such
such reasonable fee for his services; regulations as the Monetary Board may
k) Extend credit against the security of prescribe, the total indebtedness of any
jewelry, precious stones and articles of borrower to the bank may amount to a
similar nature, subject to such rules and further fifteen percent (15%) of the
regulations as the Monetary Board may unimpaired capital and surplus of such bank
prescribe; and provided the additional indebtedness is for
l) Offer other banking services as provided the purpose of financing subdivision or
in Section 72 of Republic Act No. 337 housing development, medium- and low-
and Republic Act No. 6426, as amended. income borrowers and agriculture on a fully
Thrift banks may perform the services secured basis. The term "indebtedness" as
under subsections (b), (d), (e), (g) and (i) used herein, shall mean the direct liability of
only upon prior approval of the the maker or acceptor of paper discounted
Monetary Board. Nothing in this Section with or sold to such bank and liability of the
shall be construed as precluding a thrift indorser, drawer or guarantor who obtains a
bank from performing, with prior loan from or discounts paper with or sells
approval of the Monetary Board, paper under his guaranty to such bank; and
commercial banking services, or from shall include in the case of liabilities of a
operating under an expanded banking partnership or association the liabilities of
authority, nor from exercising, the several members thereof; and shall
whenever applicable and not include in the case of liabilities of a
inconsistent with the provisions of this corporation, all liabilities of all the
Act and Bangko Sentral regulations, and subsidiaries thereof in which such
such other powers incident to a corporation owns or controls a majority
corporation. interest: Provided, That even if the parent
corporation, partnership or association has
Sec. 11. Limitations on Lending Authority. no liability to the bank, the Monetary Board
may prescribe the combination of liabilities
— Except as the Monetary Board may otherwise of subsidiary corporations or members of
prescribe, the direct indebtedness to thrift the partnership or association under certain
banks of any person, company, corporation, or circumstances, including but need not be
firm, including the indebtedness of members of limited to any of the following situations:
a partnership and association, for money (a) the parent corporation, partnership or
borrowed, excluding: association guarantees the repayment of
liabilities;
(b) the liabilities were incurred for the Provided, further, That equity investments shall
accommodation of the parent corporation not be permitted in non-related activities.Where
or another subsidiary or of the partnership the allied activity is a wholly- or majority-owned
or association; or subsidiary of the thrift bank, the Bangko Sentral
(c) the subsidiaries through separate entities may subject it to examination. Investment in
operate merely as departments or divisions allied undertaking shall include institutions
of a single entity: Provided, further, That the engaged in the following activities:
discount of bills of exchange drawn in good (a) Banking and financing;
faith against actually existing values, and the (b) Warehousing and other post-harvesting
discount of commercial and business paper activities;
actually owned by the person negotiating (c) Fertilizer and agricultural chemical and
the same, shall not be considered as money pesticides distribution;
borrowed for the purpose of this Section: (d) Farm equipment distribution;
Provided, finally, That certain types of (e) Trucking and transportation of agricultural
contingent liabilities of borrowers may be products;
included among the total liabilities as may (f) Marketing of agricultural products;
be determined by the Monetary Board. (g) Leasing; and
Loan accommodations granted by thrift (h) Other undertakings as may be determined
banks to any other bank, as well as deposits by the Monetary Board.
maintained by them in any bank licensed to
do business in the Philippines, shall be CHAPTER V SUPERVISION
subject to the loan limit of any single
borrower as herein prescribed. Sec. 13. Supervisory Powers of the Monetary
Board.
Sec. 12. Investment in Allied Undertakings. —
— The power to supervise the operation of any
Subject to such guidelines as may be established thrift bank by the Monetary Board shall consist
by the Monetary Board, thrift banks may invest in placing limits to the maximum credit allowed
in equities of allied undertakings as hereinafter to any individual borrower; in indicating the
enumerated: Provided, That: manner in which technical assistance shall be
(a) the total investments in equities shall not extended to thrift banks; in imposing a uniform
exceed twenty-five percent (25%) of the net accounting system and manner of keeping the
worth of the thrift bank; accounts and records of thrift banks; in
(b) the equity investment in any single instituting periodic surveys of loans and lending
enterprise shall be limited to fifteen percent procedures, audits, test-check of cash and other
(15%) of the net worth of the thrift bank; (c) the transactions of the thrift banks; in conducting
equity investment in any single enterprise shall training courses for personnel of thrift banks;
remain a minority holding in that enterprise; and, in general, in supervising the business
and operations of the thrift banks. The Bangko
(d) the equity investment in other banks shall be Sentral shall have the power to enforce the
subject to the same provisions governing similar laws, orders, instructions, rules and regulations
investments of commercial banks and shall be promulgated by the Monetary Board applicable
deducted from the investing bank's net worth to thrift banks; to require thrift banks, their
for the purpose of computing of the prescribed directors, officers and agents to conduct and
ratio as provided in manage the affairs of the thrift bank in a lawful
and orderly manner; and upon proof that the
Section 9 hereof: thrift bank or its board of directors or officers
are conducting and managing the affairs of the
bank in a manner contrary to laws, orders,
instructions, rules and regulations promulgated there be any, where the thrift bank concerned is
by the Monetary Board or in a manner located.
substantially prejudicial to the interest of the
government, depositors, creditors, or the CHAPTER VII EXEMPTIONS
general public, to appoint a conservator
pursuant to Section 29 of Republic Act No. 7653 Sec. 17. Tax Exemptions.
without prejudice to the prosecution of persons
responsible for such violations under the — All thrift banks, whether created or organized
provisions of Sections 36 and 37 of Republic Act under this Act or in operation as of the date of
No. 7653. The director and examiners of the effectivity of this Act, shall be exempt from
department of Bangko Sentral charged with the payment of all taxes, fees and charges of
supervision of thrift banks are hereby whatever nature and description, except the
authorized to administer oaths to any director, corporate income taxes and local taxes, fees and
officer or employee of any thrift bank or to any charges for a period of five (5) years, counted
voluntary witness and to compel the from the date of commencement of operations
presentation of all books, documents, papers or for thrift banks created under this Act and from
records necessary in his or their judgment to the date of the effectivity of this Act for existing
ascertain the facts relative to the true thrift banks.
conditions of any thrift bank or to any loan.
Sec. 18. Exemption from Publication
CHAPTER VI INCENTIVES Requirement.

Sec. 14. Reserve Requirement Differential. — — The foreclosure of mortgage covering loans
Reserve requirement imposed on thrift banks by granted by thrift banks and executions of
the Monetary Board shall enjoy equitable judgments thereon involving real properties and
preferential terms over those imposed on levied upon by a sheriff shall be exempt from
commercial banks: Provided, That the Monetary publication requirements where the total
Board may change reserve differentials for the amount of the loan, excluding interest due and
purpose of stimulating economic growth in the unpaid, does not exceed One hundred thousand
countryside, thereby promoting national pesos (P100,000) or such amount as the
economic development. Monetary Board may prescribe, as may be
warranted by the prevailing economic
Sec. 15. Liberalized Branching Rules. conditions and by the nature of service of
customers served by each category of the thrift
— Thrift banks shall have unrestricted branching bank. It shall be sufficient publication in such
right within the region, free from any cases if the notice of foreclosure and execution
assessment or surcharges required in setting up of judgment are posted in the conspicuous area
a branch, but under coordination with the of a thrift bank's premises, municipal building,
Bangko Sentral which will have to assess that the municipal public market, the barangay hall,
there are qualified personnel, control and and the barangay public market, if there be any,
procedures to operate the branch. where the land mortgaged is situated within a
Sec. 16. Notices of Statement of Condition. period of sixty (60) days immediately preceding
the public auction of the execution of judgment.
— Subject to Monetary Board approval, a thrift Proof of publication as required herein shall be
bank may publish its statement of condition in a accomplished by an affidavit of the sheriff or
newspaper of general circulation, or post it in officer conducting the foreclosure sale or
the most conspicuous area of its premises, execution of judgment and shall be attached
municipal building, municipal public market, with the records of the case. A thrift bank shall
barangay hall and barangay public market if be allowed to foreclose lands mortgaged to it;
Provided, That said lands shall be covered under six (6) months but not more
Republic Act No. 6657. than ten (10) years, or both, at
the discretion of the court, shall
Sec. 19. Exemption from Notarial Charges. — be imposed upon: (a) Any
officer, employee, or agent of a
Any metropolitan, municipal, or municipal thrift bank who shall:
circuit trial court judge in his capacity as notary (1) Make false entries in any
public ex officio shall administer the oath to or bank report or statement
acknowledge the instrument of any thrift bank thereby affecting the
and its borrowers or mortgagor free from all financial interest of, or
charges, fees and documentary stamp tax, causing damage to, the
collectible under existing laws, relative to any bank or any person; or
loan or transaction not exceeding Fifty pesos (2) Without order of a court
(P50.00) or such amount as the Secretary of of competent jurisdiction,
Finance, upon recommendation of the disclose any information
Monetary Board, may prescribe as may be relative to the funds or
necessary to promote and expand the economy. properties in the custody
Sec. 20. Exemption from Registration Fees. — of the bank belonging to
Any register of deeds shall accept from any private individuals,
thrift bank and its borrowers and mortgagors for corporations, or any other
registration, free from all charges, fees and entity; or
documentary stamp tax, collectible under (3) Accept gifts, fees or
existing laws, any instrument, whether commissions or any other
voluntary or involuntary, relating to loans or form of remuneration in
transactions extended by any thrift bank in an connection with the
amount not exceeding Fifty thousand pesos approval of a loan from
(P50,000): Provided, however, That charges, if said bank; or
any, shall be collectible on the amount in excess (4) Overvalue or aid in the
of Fifty thousand pesos (P50,000); and that an overvaluing any security
instrument related to assignments of several for the purpose of
mortgages consolidated in a single deed, if any, influencing in any way the
shall be levied only on the amount in excess of action of the bank on any
Fifty thousand pesos (P50,000) of the loan; or
consideration in the assignment of each (5) Appear and sign as
mortgage, or such amount as the Secretary of guarantor, indorser, or
Finance, upon recommendation of the surety for loans granted;
Monetary Board, may prescribe as may be or
necessary to promote and expand the economy. (6) Violate any provision of
this Act.
CHAPTER VIII PROHIBITIONS (b) (b) Any applicant for a loan from, or
borrower of a thrift bank who shall:
Sec. 21. Prohibited Acts. (1) Misuse, misapply or divert the
proceeds of the loan obtained
(1) Without prejudice to any by him from its declared
prosecution under any law purpose; or
which may have been violated, (2) Fraudulently overvalue property
a fine of not more than Ten offered as security for a loan
thousand pesos (P10,000) or from said bank; or
imprisonment for not less than
 (3) Give out or furnish false or banking, not authorized under this
willful misinterpretation of Act or existing laws which shall use
material facts for the purpose of the words "Development Bank,"
obtaining, renewing, or "Savings Bank," "Mortgage Bank,"
increasing a loan extending the "Savings and Mortgage Bank," or
period thereof; or "Savings and Loan Association," as
(4) Attempt to defraud the said part of the name or title of such
bank in the event of court bank or of such person, association,
action to recover the loan; or or corporation, shall be punished by
(5) Offer any officer, employee or a fine of not less than One hundred
agent of a thrift bank a gift, fee, pesos (P100), but in no case to
commission or other forms of exceed Thirty thousand pesos
compensation in order to (P30,000), for each day during
influence such bank personnel which the said words are so used.
into approving a loan
application; or CHAPTER IX GENERAL PROVISIONS
(6) Dispose or encumber the Sec. 22. Minors as Depositors.
property offered as security for
the loan. — Minors in their own rights and in their own
(c) Any examiner, or officer or names may make deposits and withdraw the
employee of the Bangko Sentral or same, and may receive dividends and interest:
of any department, bureau, office, Provided, however, That, if any guardian shall
branch, or agency of the give notice in writing to any thrift bank not to
government who is assigned to make payments of deposits, dividends, or
examine, supervise, assist or render interest to the minor of whom he is the
technical service to thrift banks and guardian, then such payment shall be made only
who shall connive or aid in the to the guardian. Sec. 23. Return of Deposits. —
commission of the same. Deposits shall be returned to the depositors or
(d) Any metropolitan, municipal, or to their legal representatives in the manner and
municipal circuit trial court judge or at the time and under the conditions which shall
register of deeds who shall demand be determined by the board of directors and
or accept, directly or indirectly, any stipulated in regulations which shall be in
gift, fee, commission, or any other conformity with laws and with such regulations
form of compensation in connection as the Monetary Board may prescribe.
with the service, or shall arbitrarily
and without reasonable cause delay Sec. 24. Deposit Insurance.
the acknowledgment or
administration of oath or the — Deposit in thrift banks shall be eligible for
registration of documents required insurance coverage under Republic Act No.
to be performed by said judge or by 3591, as amended. Sec. 25. Annual Fees. —
said register of deeds shall be Consistent with the provisions of
punished with a fine of not more
than One (1) thousand pesos Section 28 of Republic Act No. 7653,
(P1,000) or by imprisonment of not
more than one (1) year, or both, at any thrift bank organized under this Act may,
the discretion of the court. pursuant to regulations promulgated for the
(e) Any bank not organized under this purpose by the Monetary Board, be required to
Act and any person, association, or contribute to the Bangko Sentral an annual fee
corporation doing the business of in an amount to be determined by the
Monetary Board. Sec. 26. Implementation. — provision of this Act, shall apply to thrift banks
For the purpose of carrying the objectives of organized hereunder.
this Act, the Bangko Sentral is authorized to Sec. 32. Effectivity.
require the services and facilities of any
department or instrumentality of the — This Act shall take effect fifteen (15) days
government or any officer or employee of any following the completion of its publication in
such department or government the Official Gazette or in two (2) national
instrumentality. newspapers of general circulation. Approved:
Sec. 27. Annual Report. February 23, 1995

— The Monetary Board shall submit a report to THRIFT OPERATIONS

the Congress of the Philippines at the end of SOURCES OF FUNDS:
each calendar year of all the rules and -DEPOSITS
regulations promulgated by it in accordance -BORROWINGS
with the provisions of this Act, as well as its -EQUITY CAPITAL
other actuations in connection with thrift banks USES OF FUND
together with an explanation of its reasons -LOANS
therefor and recommendations on legislative -INVESTMENTS
actions. -OPERATING EXPENSES
Sec. 28. Parity Clause Under Same -RESERVES
Circumstances. TYPES OF RISKS
— The incentives granted shall be enjoyed by -CREDIT RISK
financial institutions giving the same services for -INTEREST RISK
countryside lending and development under -LIQUIDITY RISK
such terms as may be equitable and as may be -OPERATIONAL RISK
defined by the Monetary Board. -MARKET RISK
Sec. 29. Separability Clause. VALUATION OF SAVINGS INSTITUTION
— If any provision of this Act or the application -ASSETS
thereof to any person or circumstances is held -LIABILITIES
invalid, the other provisions of this Act and the -EARNINGS
application of such provisions to other persons -CAPITALIZATION
and circumstances, shall not be affected -MARKET CONDITION
thereby. SAVINGS INSTITUTION IN CRISIS
Sec. 30. Repealing Clause. -FINANCIAL CRISIS OF 2008
-COVID-19 PANDEMIC
— Republic Act No. 4093, Republic Act No. -CYBERSECURITY THREATS
3779 to the extent that it applies to thrift banks, -INTEREST RATES FLUCTUATIONS
and Chapter 5 of Republic Act No. 337 are THRIFT BANKS (COMPOSED)
hereby repealed. Any law or parts of any law
inconsistent with the provisions of this Act are -SAVINGS AND MORTGAGES BANKS
hereby repealed. In all matters affecting the -PRIVATE DEVELOPMENT BANKS
price stability of the peso, the provisions of -STOCK SAVINGS AND LOAN ASSOCIATIONS
Republic Act No. 7653 shall prevail. -MICROFINANCE THRIFT BANKS
Sec. 31. Applicability of Other Laws. -CREDIT UNIONS (NOT CLASSIFIED AS BANKS-
ENCOURAGE PEOPLE SAVE)
— The provisions of Republic Act No. 7653 and -These different thrift institution cater to the needs of
Republic Act No. 337, as amended, insofar as households, agriculture, and industry
they are applicable and not in conflict with any -Gives reasonable rates
-Encourages in accumulating savings of depositors and -Regulatory oversight : government agencies and
investing them international standard and guidelines such as World
-Provide short-term working capital and medium and Bank and the International Finance Corporation
long-term financing to businesses engaged in -Valuable source of financing and support for business
agriculture, services, industry and housing, and and projects on developing countries that may have
diversified financial and allied services, and to their difficulties accessing traditional sources of financing
chosen markets and constituencies, especially small and -Offer longer repayment terms lower interest rates and
medium enterprises and individual. technical assistance
-Establish banking offices at the approval of the -May have strong focus on environmental and social
monetary board sustainability, promoting responsible and sustainable
development.
BRANCH- an independent unit of the head office EXAMPLES
performing all the functions and offering the head -Development Bank of the Philippines
office’s service facilities -Land Bank of the Philippines
-Al-Amanah Islamic Investment Bank of the Philippines
EXTENSION OFFICE- operates like a branch -Philippine Veterans Bank
-First United Bank
-Grants loans under AGRARIAN REFORM CREDIT and
SUPERVISED CREDIT PROGRAMS Of the government. STOCK AND LOAN ASSOCIATIONS
-Accumulate savings of their depositor/ stockholders
SAVINGS ANG MORTGAGES BANKS and use these accumulated savings, together with their
-Specializing in granting mortgage loans capital, for the loans that they grant and for investments
-Accepts deposits, using the funds to provide loans in government and private securities
primarily for mortgages and consumer loans. -Provide personal finance and long-term financing for
-Savings banks were originally created to promote thrift the home building and improvement
and home ownership by providing affordable mortgage -First appeared in 1800’s – factory workers could save
loans to individuals and family. They are smaller than money to buy a home
commercial banks and may have more localized -Loosely regulated until the Great Depression.
presence. -Since SLAs were restricted to mortgages and savings
-Subject to regulatory oversight by government agencies and time deposits, the MONETARY CONTROL ACT
EXAMPLE BANKS extend their permitted activities to commercial loans,
-BPI Direct BanKO non-mortgage consumer lending , and trust services
-Philippine Savings Bank -Many have been owned by depositors (main source of
-Robinsons Bank funding) -were called MUTUAL SAVINGS AND LOANS
-Asia United Bank
-Philippine Business Bank ASSOCIATION OR MUTUAL ASSOCIATIONS
-Mutual S&Ls, like credit union, used their earnings to
PRIVATE DEVELOPMENT BANK lower future loan rates, raise deposit rates or reinvest ,
-Also known as DEVELOPMENT FINANCE while corporate S&Ls either reinvested profits or
INSTITUTION(DFI) returned profits to their owners by paying dividends
-Specializes in providing long-term financing -Most S&Ls are corporations, giving them access to
-Typically owned and operated by government or additional capital funding to compete more successfully
private sector investors and facilitate ,mergers and acquisitions.
-Focus on promoting economic development by
financing projects that have the potential to generate MICROFINANCE THRIFT BANKS
economic growth and create jobs in developing -Are small thrift banks that cater to small, micro, and
countries` cottage industries
-micro- small
-Grant small businesses- sari-sari stores, small bakeries,
cottage industries
-They help uplift the standard of living in most rural
areas

CREDIT UNIONS
-Are cooperative organized by people from the same
organization like farmers, fishermen, teachers, sailors,
and employees of one company.
-Grant loans to members and get deposits from them
-Members avail loans as multiple of their deposits .
-Under the supervision of the COOPERATIVE
DEVELOPMENT AUTHORITY under the OFFICE OF THE
PRESIDENT

RURAL BANKS AND COOPERATIVE

-A financial entity that belongs to its members
-Geared toward the development of the countryside
-Popular in rural communities
-Role is to promote and expand the rural economy by
providing basic financial services
-Help farmers through the stages of production from
buying seedlings to marketing their produce
-RURAL BANKS -privately owned and managed
-COOPERATIVE BANKS – organized / owned by
cooperatives of federations of cooperatives