Article 171Supplement v1, p. 171

COMMERCIAL LAWS SUPPLEMENT

Where in the process of a bank merger or consolidation,

the merged or constituent bank may not be able to

comply fully with the net worth to risk asset ratio herein

prescribed, the Monetary Board may, at its discretion,

temporarily relieve the bank from full compliance with

this

requirement

under

such

conditions

it

may

prescribed.

CHAPTER IV Powers

SECTION 10. Powers of Thrift Banks . — In addition to

powers granted it by this Act and existing laws, any thrift

bank may:

(a) Accept savings and time deposits;

(b) Open current or checking accounts: Provided , That the

thrift bank has net assets of at least Twenty million pesos

(P20,000,000) subject to such guidelines as may be

established by the Monetary Board; and shall be allowed

to directly clear its demand deposit operations with the

Bangko

Sentral

and

the

Philippine

Clearing

House

Corporation;

(c) Act as correspondent for other financial institutions;

(d)

Act

as collection agent for government entities,

including but not limited to, the Bureau of Internal

Revenue, Social Security System, and the Bureau of

Customs;

(e) Act as official depository of national agencies and of

municipal, city or provincial funds in the municipality, city

or province where the thrift bank is located, subject to

such guidelines as may be established by the Monetary

Board;

(f) Rediscount paper with the Philippine National Bank,

the Land Bank of the Philippines, the Development Bank

of

the

Philippines, and other government-owned or

-controlled corporations. Said institutions shall specify the

nature of paper deemed acceptable for rediscount, as

well as rediscounting rate to be charged by any of these

institutions; and

(g) Issue mortgage and chattel mortgage certificates, buy

and sell them for its own account or for the account of

others, or accept and receive them in payment or as

amortization of its loan.

Such mortgage and chattel mortgage certificates shall

be issued exclusively in national currency and exclusively

for the financing of equipment loans, mortgage loans for

the acquisition of machinery and other fixed installations,

conservation, enlargement or improvement of productive

properties and real estate mortgage loans for: (1) the

construction, acquisition, expansion or improvement of

rural and urban properties; (2) the refinancing of similar

loans and mortgages; and (3) such other purposes as may

be authorized by the Monetary Board.

A thrift bank shall coordinate the amounts and maturities

of its certificates with those of its loans, so as to ensure

adequate cash receipts for the payment of principal and

interest at the time they become due. The bank shall

accept its own certificates at least at the actual price of

issue, in any prepayment of loans which mortgage or

chattel mortgage debtors may wish to make: Provided ,

That the date of maturity of the certificates is not later

than the date on which the payment would otherwise

become due, in the absence of the aforesaid prepayment;

(h) Purchase, hold and convey real estate under the same

conditions as those governing commercial banks as

specified under Section 25 of Republic Act No. 337 ;

(i)

Engage

in

quasi-banking

and

money

market

operations;

(j) Open domestic letters of credit;

(k) Extend credit facilities to private and government

employees: Provided , That in the case of a borrower who

is a permanent employee or wage earner, the treasurer,

cashier or paymaster of the office employing him is

authorized,

notwithstanding

the

provisions

of

any

existing law, rules and regulations to the contrary, to

make

deductions

from

his

salary,

wage

or

income

pursuant to the terms of his loan, to remit deductions to

the thrift bank concerned, and collect such reasonable

fee for his services;

(l) Extend credit against the security of jewelry, precious

stones and articles of similar nature, subject to such rules

and regulations as the Monetary Board may prescribe;

and

(m) Offer other banking services as provided in Section 72

of Republic Act No. 337 and Republic Act No. 6426 , as

amended.

Thrift banks may perform the services under subsections

(b), (d), (e), (g) and (i) only upon prior approval of the

Monetary Board.

Nothing in this Section shall be construed as precluding a

thrift bank from performing, with prior approval of the

Monetary Board, commercial banking services, or from

operating under an expanded banking authority, nor

from

exercising,

whenever

applicable

and

not

inconsistent with the provisions of this Act and Bangko

Sentral regulations, and such other powers incident to a

corporation.

SECTION 11. Limitations on Lending Authority . — Except

as the Monetary Board may otherwise prescribe, the

direct

indebtedness

to

thrift

banks

of

any

person,

company,

corporation,

or

firm,

including

the

indebtedness

of

members

of

a

partnership

and

association, for money borrowed, excluding: (a) loans

secured by obligations of the Bangko Sentral ; (b) loans

fully guaranteed by the government as to the payment of

principal and interest; (c) loans to the extent covered by

the hold-out on, or assignment of, deposits maintained in

the lending bank and held in the Philippines; and (d)

other loans or credits as the Monetary Board may, from

time to time, specify as non-risk assets, which shall in no

time exceed fifteen percent (15%) of unimpaired capital

and surplus of the bank.

Notwithstanding

the

provisions

of

the

preceding

paragraph

and

subject

to

such

regulations

as

the

Monetary Board may prescribe, the total indebtedness of

any borrower to the bank may amount to a further fifteen

percent (15%) of the unimpaired capital and surplus of

such bank provided the additional indebtedness is for the

purpose

of

financing

subdivision

or

housing

development, medium- and low-income borrowers and

agriculture on a fully secured basis.

The term "indebtedness" as used herein, shall mean the

direct

liability

of

the

maker

or

acceptor

of

paper

discounted with or sold to such bank and liability of the

indorser, drawer or guarantor who obtains a loan from or

discounts paper with or sells paper under his guaranty to

such bank; and shall include in the case of liabilities of a

partnership or association the liabilities of the several

members

thereof;

and

shall include in the case of

liabilities

of

a

corporation,

all

liabilities

of

all

the

subsidiaries thereof in which such corporation owns or

controls a majority interest: Provided , That even if the

parent corporation, partnership or association has no

liability to the bank, the Monetary Board may prescribe

the combination of liabilities of subsidiary corporations or

members of the partnership or association under certain

circumstances, including but need not be limited to any

of the following situations: (a) the parent corporation,

partnership or association guarantees the repayment of

liabilities;

(b)

the

liabilities

were

incurred

for

the

accommodation of the parent corporation or another

subsidiary or of the partnership or association; or (c) the

subsidiaries through separate entities operate merely as

departments or divisions of a single entity: Provided ,

further , That the discount of bills of exchange drawn in

good

faith

against actually existing values, and the

discount of commercial and business paper actually

© Compiled by RGL

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