The General Banking Law of 2000, or They may authorize the organization of a bank

Republic Act No. 8791 (RA 8791), is the or quasi banks subject to the following
primary regulatory law for banking and finance conditions:
in the Philippines. It establishes the rules for 1. That the entity is a stock corporation
banks, quasi-banks, and trust entities  It is very important because a
person cannot create a bank on
BANKING LAWS its own.
There must be a stock corporation for the
What are Banks? monetary board to authorize to turn it or
transform it into a bank or to authorize it into
Banks shall refer to entities engaged in the
engaging in banking practice
lending of funds obtained in the form of deposits
2. That its funds are obtained from the
from the public (Sec. 3.1, General Banking Law) public, it shall mean 20 or more persons
Must be a stock corporations and funds are There is no problem with obtaining funds from
obtained from the public (min. 20 depositors) 20 or more persons a single bank even contains
a lot of accounts for their depositors if not
Banking is fiduciary in nature that requires high hundreds maybe thousands even tens of
standards of integrity and performance thousands and that's why this requirement is
easily satisfied
this might actually be different from the Public it shall mean 20 or more percents
perception of people as to banks because with 3. That the minimum capital requirements
regards to people they might think that the prescribed by the monetary board for
bank's primary function is to actually collect each category of banks are satisfied
deposits of people in order for their money to be (Sec.8, General Banking Law)
safe. Depending on what kind of bank you would like
Bank's primary function is not keeping your to organize there is a specific minimum capital
money but it's to lend out money requirement for you to satisfy in order for the
 The reason why banks collect monetary board to authorize you with the power
deposits from their clients and to engage in banking practices
customers is because they need
money in order for them to allow NATURE OF BANKS
other people to borrow money off State recognizes the vital role of banks in
Investment Company providing an environment conducive to the
 If engaged solely in investing, sustained development of the national
reinvesting, or trading in securities- not economy and the fiduciary nature of banking
engaged in banking that requires high standards of integrity and
 If loans out of money of its customers, performance. In furtherance thereof the state
collects interests and charges a shall promote and maintain a stable and efficient
commission to both lender and banking and financial system that is globally
borrower- engaged in banking competitive dynamic and responsive to the
Quasi-Banks- engaged in borrowing of funds demands of a developing economy.
through the issuance, endorsement or (Sec. 2, General Banking Law)
assignment with recourse or acceptance of Nature of the Bank- is for the banks to support
deposit substitutes for purpose of relending or the national economy of the Philippines or if we
purchasing of receivables and other obligations talk about banks in general of their respective
countries to wherever it may be established

ORGANIZATION OF BANKS
Monetary Board- one that exercises the power
and function of the Banko Sentral ng Pilipinas
(BSP).
 CONSEQUENCES OF NATURE OF development (Sundiang, Sr. and
BANKS Aquino)
 Rural banks are governed by Repubic
 Banks are subject to heavy and close Act No. 7353 as amended otherwise
supervision and/or regulation by the known as the Rural Bank Act of 1992
Bangko Sentral ng Pilipinas  Loans and advances extended by
 They are required to exercise utmost rural banks organized and operated
diligence in the handling of deposits under the rural bank act shall be
Diligence is the highest form of diligence in primarily for the purpose of meeting the
handling the deposits of their depositors normal credit needs of not only farmers
 (ObliCon- diligence of a good father. but also fishermen or for families
Extra-ordinary diligence in owning or cultivating land dedicated to
transportation law) agricultural production as well as a
normal credit needs of cooperatives and
With regards to labor, there are special merchants in the rural area
rules on strikes and lockouts (Sec. 6, Rural Bank Act)
o Public officers can be directors
 Any strike or lockout involving banks, if Thrift Banks
unsettled after 7 days calendar days,  A bank primarily engaged in extending
shall be reported by BSP to Sec. of banking services to small and medium
Labor, there are 2 options: enterprises and individuals with prior
a. May assume jurisdiction over and monetary board approval it may open
decide the dispute current and checking accounts and
b. Certify to NLRC for compulsory engage in quasi-banking operations
arbitration
(Riguera)
 President may intervene and assume
 Banks provide short-term working
jurisdiction over such labor dispute
capital medium and long-term financing
AUTHORITY TO INCORPORATE AND
to business engaged in agriculture
OPERATE- Articles of Incorporation filed with
services industry and housing
the SEC accompanied by the favorable
(Thrift Banks Act)
recommendation (Certificate of Authority) of the
 Thrift banks are governed by R.A.
BSP
No.7096, otherwise known as the Thrift
Banks Act of 1995
CLASSIFICATION OF BANKS
 Includes savings and mortgage banks,
 Universal Banks
private development banks, and stock
 Commercial Banks
savings and loan associations
 Thrift Banks
Cooperative Banks
 Rural Banks
 Cooperatives which have joined together
 Cooperative Banks
in accordance with the Cooperative Act
 Islamic Banks
of the Philippines
 Other classification of banks as
 Banks that primarily provide financial
determined by the monetary board
banking and credit services to
Rural Banks
cooperative organizations and their
 Banks primarily engaged in the
members
countryside lending and in lending to
 Cooperative banks are governed by R.A.
farmers and agricultural enterprises
9520 otherwise known as the Philippine
(Riguera)
Cooperative ode of 2008
 Banks that are created to make needed
ISLAMIC BANKS
credit available and readily accessible in
 Banks which provides banking service
the rural areas for the purpose of
in accordance with Islam.
promoting comprehensive rural
  In Islam, the collection or receipt of  Have the authority to exercise, in
interest is forbidden. The funds laced by addition to the powers and functions of
account holders are invested in commercial banks, powers of an
transactions and enterprises which are investment house and the power to
permissible under Islam. invest in non-allied enterprises
 Islamic Banks are more like investment  They cannot only engage in non-allied
banks than standard banks (Riguera). undertakings and quasi-banking
 Governed by Republic Act No. 6848 institutions, they could also engage in
otherwise known as The Charter of the non-allied enterprises
Islamic Investment Bank of the Banks Determined by the Monetary Board of
Philippines the BSP- only universal bank and commercial
Interesting thing to note about Islamic banks is banks can create and accept demand deposits
that there is such a thing as a non-interest- without separate authority from the Monetary
bearing deposit what this means is that the Board of the BSP.
depositors deposit money in the bank, but they - Only universal banks may act as an
will not accumulate interest from their money in investment house
the setback.
 There is no stopping this “depositors” TERMS TO NOTE
from investing in an investment scheme Quasi-banking Operation/ Function- that term
provided by the bank with that said means borrowing funds for the borrower's own
whatever instead of depositing the same account through the issuance endorsement or
to the said bank. With that said whatever acceptance of debt instruments of any kind other
interest or what we call their income or than deposits or through the issuance of
increase in investment that the investor participation certificates or of repurchase
slash depositor will receive will go to agreements from 20 or more lenders at one time
that depositor and small portion from for purposes of relending or purchasing of
that increase in value will be shared by receivables and other similar obligation
the bank (Sec.2(c), P.D.NO 1738)
 Borrowing of funds through other
Commercial Banks means other than the deposit from more
 Banks that are all given such power from 20 or more persons
necessary to engage in in commercial Banking Operations / Functions- borrowing of
banking in addition to general powers; funds is from 20 or more people in the form of
 Commercial Banking includes the power deposit
to accept drafts, issue letters of credits, Investment House- any enterprise which
discounting and negotiation of engages in the underwriting of securities of other
negotiable instruments and evidence of corporations (Sec. 2, Investment Houses Law)
debt, accept and create demand deposits Allied Undertaking/ Enterprise- May either be
and the like. financial or non-financial allied undertakings.
 Banks primarily engaged in extending Financial Allied Undertakings Includes:
banking services to small and medium 1. Leasing Companies
enterprises and individuals. 2. Banks
 It may open current and checking 3. Investment Houses
accounts and invest in the equities of 4. Financing Companies
allied undertakings. It may also engage 5. Credit Card Companies
in quasi-banking operations. 6. Capital
 Limited to allied undertakings and 7. Companies Engaged in Stock
quasi-banking operations only Brokerages/ Securities Dealership
8. Companies engaged in Foreign
Universal Banks- are actually commercial Exchange/ Dealership.
banks
These may also include insurance companies
and holding companies that universal banks may
invest in (Sec. X377, Manual Regulations for
Banks)
Both the commercial banks and the universal
banks can invest in these kinds of enterprises
except for insurance companies and holding
companies which only the universal banks
may invest in
Non-Financial Allied Undertakings /
Enterprises Includes:
1. Warehousing Companies
2. Storage Companies
3. Safe Deposit Box Companies
4. (TBC)
5.
6.
7. Insurance Agencies/ Brokerages
Insurance companies are different from
insurance agencies and brokerages.
Insurance Companies- are the insurer of the
insurance policy they are the ones that provide
the insurance products whereas insurance
agencies and brokerages are the one that sells
these products so they are not the insurer but
they are merely the seller of the products
8. TBC
9.
10.
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