CLASSIFICATION OF BANKS

General Banking Laws

- General Banking Law of 2000 (Republic Act 8791)

- New Central Bank Act (Republic Act 7653)

Banks – Entities that obtain funds from the public in the form of deposits and re-lend it to the public

Quasi-banks – Thos that obtain funds in the form of deposit substitutes and re-lend the same and not from the public or depositors

Finance companies and other financial intermediaries – Those that lend funds from their own assets

UNIVERSAL (UB) COMMERCIAL (CB) THRIFT (TB) RURAL (RB) COOPERATIVE ISLAMIC (IB)
(CB)
DEFINITION
A commercial bank with the Privately-owned institutions that Composed of savings and Government Organized, owned and a division, department,
additional authority to exercise accept deposits and lend money to mortgage banks, private sponsored/assisted banks controlled by cooperative office or branch of a
the powers of an investment projects to earn interest. They also development banks, stock which are privately organizations, for the conventional bank that
house offer personal, business, and savings and loan associations and managed and largely purpose of providing conducts business in
mortgage loans, checking account microfinance thrift banks. privately owned that financial and credit accordance with the
financial service conglomerates services, and basic financial provide credit facilities to services to cooperatives principle of Shari'ah.
that combine investment products like savings accounts and Thrift banks are engaged in farmers and merchants, or and their members. Its
banking, commercial banking, certificate of deposit to individuals accumulating savings of to cooperatives of such members are either regular
development banking, and and businesses. They are primarily depositors and investing them. farmers or merchants at or associate.
insurance to encompass a wider owned by shareholders and are reasonable terms and in
variety of services. profit-based. general, to the people of
the rural community.
GOVERNING LAW
Republic Act 8791- The General Republic Act 8791- The General Republic Act 7906 - Thrift Republic Act 7353 - Rural Republic Act No 6938 - Republic Act No. 11439
Banking Law of 2000 Banking Law of 2000 Banks Act of 1995 Act of 1992 Cooperative Code of the - Islamic Banking Act
Philippines.

Republic Act No 9520 -

Philippine Cooperative
Code of 2008
(amendment)
POWER AND SCOPE OF AUTHORITIES
UB shall have the authority to CB shall have the authority to (a) grant loans, whether secured (a) extend loans and CB shall primarily provide as they are not
exercise, in addition to the exercise all such powers as may be or unsecured; advances primarily for the financial, banking and inconsistent or
powers and services authorized necessary to carry on the business (b) invest in readily marketable purpose of meeting the credit services to incompatible with the
for a CB as enumerated in Item of commercial banking, such as bonds and other debt securities, normal credit needs of cooperatives and their provisions of R.A. No.
“b(2)” and those provided by accepting drafts and issuing letters commercial papers and accounts farmers, fishermen or farm members, although it may 6848, an IB may perform
other laws, the following: of credit; discounting and receivable, drafts, bills of families as well as provide the same services any or all of the following
(a) the powers of an investment negotiating promissory notes, exchange, acceptances or notes cooperatives, merchants, to non-members or the services:
house (IH) as provided under drafts, bills of exchange, and other arising out of commercial private and public general public.
existing laws; evidences of debt; accepting or transactions; employees; (a) open savings accounts
(b) the power to invest in non- creating demand deposits; (c) issue domestic letters of (b) accept savings and time In addition to the powers for safekeeping or
allied enterprises; receiving other types of deposits credit; deposits; granted to Coop Banks custody with no
(c) the power to own up to one and deposit substitutes; buying (c) act as correspondent of under existing laws, any participation in profit and
hundred percent (100%) of the and selling foreign exchange and other FIs; Coop Bank may perform losses unless authorized
equity in a TB, an RB, a financial gold or silver bullion; acquiring (d) extend credit facilities to (d) rediscount paper with any or all of the banking by the account holders to
allied enterprise, or a non- marketable bonds and other debt private and government the LBP, DBP or any other services offered by rural be invested; (b) accept
financial allied enterprise; and securities; and extending credit, employees; bank, including its banks, as well as any or all investment account
(d) in case of publicly-listed UBs, subject to such rules as the (e) extend credit against the branches and agencies. of the banking services placements and invest the
the power to own up to 100% of Monetary Board may promulgate. security of jewelry, precious Said banks shall specify offered by other types of same for a term with the
the voting stock of only one (1) These rules may include the stones and articles of similar the nature of paper deemed banks, subject to prior IB’s funds in Islamically
other UB or CB. determination of bonds and other nature, subject to such rules and acceptable for rediscount, approval of the Bangko permissible transactions
debt securities eligible for regulations as the Monetary as well as the rediscount Sentral. on participation basis;
A UB may perform the functions investment, the maturities and Board may prescribe; rate to be charged by any of (c) accept foreign
of an IH either directly or aggregate amount of such (f) accept savings and time these banks; currency deposits from
indirectly through a subsidiary investment. deposits; (e) act as collection agent; banks, companies,
IH; in either case, the (g) rediscount paper with the (f) acquire readily organizations and
underwriting of equity securities It may also exercise or perform Land Bank of the Philippines marketable bonds and individuals, including
and securities dealing shall be any or all of the following: (LBP), Development Bank of the other debt securities; foreign governments;
subject to pertinent laws and (a) invest in the equities of allied Philippines (DBP), and other (g) offer other banking (d) buy and sell foreign
regulations of the Securities and enterprises as provided in Sections government-owned or - services as provided in exchange;
Exchange Commission (SEC): 31 and 32 of R.A. No. 8791; controlled corporations; Section 53 of R.A. No. (e) act as correspondent
Provided, That if the IH functions (b) purchase, hold and convey real (h) accept foreign currency 8791; and of banks and institutions
are performed directly by the UB, estate as specified under Sections deposits as provided under R.A. (h) buy and sell foreign to handle remittances or
such functions shall be 51 and 52 of R.A. No. 8791; No. 6426, as amended; exchange. With prior any fund transfers;
undertaken by a separate and (c) receive in custody funds, (i) act as correspondent for other approval of the Monetary (f) accept drafts and issue
distinct department or other documents and valuable objects; financial institutions (FIs); Board, an RB may perform letters of credit or letters
similar unit in the UB: Provided, (d) act as financial agent and buy (j) purchase, hold and convey real any or all of the following of guarantee, negotiate
further, That a UB cannot and sell, by order of and for the estate as specified under Sections services: notes and bills of
perform such functions both account of their customers, shares, 51 and 52 of R.A. No. 8791; (i) accept current or exchange and other
directly and indirectly through a evidences of indebtedness and all (k) offer other banking services checking accounts: evidence of indebtedness
subsidiary. types of securities; as provided in Section 53 of R.A. Provided, That such RB under the universally
(e) make collections and payments No. 8791; and has net assets of at least accepted Islamic
for the account of others and (l) buy and sell foreign exchange. P5.0 million; financial instruments;
perform such other services for (j) accept negotiable order (g) act as collection agent
their customers as are not With prior approval of the of withdrawal (NOW) insofar as the payment
incompatible with banking Monetary Board, and subject to accounts; orders, bills of exchange
business; such guidelines as may be (k) act as trustee over or other commercial
(f) upon prior approval of the established by it, TBs may also estates or properties of documents are exclusive
Monetary Board, act as managing perform the following services: farmers and merchants; of riba or interest
agent, adviser, consultant or (m) open current or checking (l) act as official prohibitions;
administrator of investment accounts; depository of municipal, (h) provide financing
management/advisory/consultanc (n) engage in trust, quasi-banking city or provincial funds in with or without collateral
y accounts; functions and money market the municipality, city or by way of leasing, sale
(g) rent out safety deposit boxes; operations; province where it is and leaseback, or cost
and (o) act as collection agent for located; plus profit sales
(h) engage in quasi-banking government entities, including (m) sell domestic drafts; arrangement;
functions. but not limited to, the Bureau of and (i) handle storage
Internal Revenue (BIR), Social (n) invest in allied operations for goods or
Security System (SSS) and the undertakings. commodity financing
Bureau of Customs (BOC); secured by warehouse
(p) act as official depository of receipts presented to the
national agencies and of bank;
municipal, city or provincial (j) issue shares for the
funds in the municipality, city or account of institutions
province where the TB is located; and companies assisted
by the bank in meeting
(q) issue mortgage and chattel subscription calls or
mortgage certificates, buy and augmenting their capital
sell them for its own account or and/or fund requirements
for the account of others, or as may be allowed by
accept and receive them in law;
payment or as amortization of its (k) undertake various
loan; investments in all
(r) invest in the equity of allied transactions allowed by
undertakings; the Islamic Shari’a in
(s) issue foreign letters of credit; such a way that shall not
and permit the haram
(t) pay/accept/negotiate (forbidden), nor forbid
import/export draft/bills of the halal (permissible);
exchange. (l) act as an official
government depository,
or its branches,
subdivisions and
instrumentalities and of
government-owned or -
controlled corporations,
particularly those doing
business in the
Autonomous Region;
(m) issue investment
participation certificates,
muquaradah (non-
interest-bearing bonds),
debentures, collaterals
and/or the renewal and
refinancing of the same,
with the approval of the
Monetary Board, to be
used by the IB in its
financing operations for
projects that will promote
the economic
development primarily of
the Autonomous Region;
(n) carry out financing
and joint investment
operations by way of
mudarabah purchasing
for others on a cost-plus
financing arrangement,
and invest funds directly
in various projects or
through the use of funds
whose owners desire to
invest jointly with other
resources available to the
IB on a joint mudarabah
basis; and
 (o) invest in equities of
the following allied
undertakings: (I)
Warehousing companies;
(II) Leasing companies;
(III) Storage companies;
(IV) Companies engaged
in the management of
mutual funds but not in
the mutual funds
themselves; and
(V) Such other similar
activities as the Monetary
Board has declared or
may declare as
appropriate from time to
time, subject to existing
limitations imposed by
law.
REQUIREMENTS
Required Minimum Capitalization
Head Office Only – 3.00 billion Head Office Only – 2.00 billion * Head office in NCR For RURAL and COOP BANKS The capitalization
Up to 10 branches – 6.00 billion Up to 10 branches – 4.00 billion Head Office Only – 500 million * Head Office in NCR requirements of an
11 to 100 branches – 15.00 11 to 100 branches – 10.00 billion Up to 10 branches – 750 million Head Office Only – 50 million Islamic bank shall be
billion More than 100 branches – 15.00 11 to 50 branches – 1.00 billion Up to 10 branches – 75 million equal to that prescribed
More than 100 branches – 20.00 billion More than 50 branches – 2.00 11 to 50 branches – 100 million by the Bangko Sentral
billion billion More than 50 branches – 200 million for a universal bank.

* Head Office in all Other Areas * Head Office in All Other Areas Outside NCRv (All
Outside NCR Cities up to 3rd class municipalities)
Head Office Only – 200 million Head Office Only – 20 million
Up to 10 branches – 300 million Up to 10 branches – 30 million
11 to 50 branches – 400 million 11 to 50 branches – 40 million
More than 50 branches – 800 More than 50 branches – 80 million
million
* Head Office in All Other Areas Outside NCR (4th class
to 6th class municipalities)
Head Office Only – 10 million
Up to 10 branches – 15 million
11 to 50 branches – 20 million
More than 50 branches – 40 million
Other requirements
(a.) Subject to capital adequacy (a.) Subject to capital adequacy (a.) 40% of its voting stock shall (a.) Certification of (a.) with 15 or more natural (a.) Must consist of 3-5
standards standards be owned by the citizens of the authority from the persons who are Filipino members among Islamic
(b.) Adequate management (b.) A capital account of at least Philippines monetary board of BSP citizens. Legal age, scholars and jurists of
expertise with 5.4 billion pesos each (b.) The combined capital (b.) All members of the common interest, residing cooperative laws
(c.) Suitable shareholders accounts of each thrift bank shall Board of Directors should in the area of operation (b.) A capital stock of 1
(d.) Adequate management not be less than the amount equal be a citizen of the (b.) Must have completed a billion pesos, which is
expertise to 10% of its risk assets Philippines Pre-membership divided to 10 million
(c.) It should have a net asset of (c.) Required to contribute Education Seminar common-share with 100
at least 20 million pesos with the BSP for not more pesos each
 (d.) Required to contribute with than 1/40% of 1% of its (c.) Must submit a general (c.) Credit liabilities shall
BSP for annual fees average total assets during statement of their data not exceed by 15%
the preceding year

GR: Judicial persons can acquire banks

X: Coop banks – Natural persons