allowing foreign equity in rural banks
January 5, 2012 1:13pm
The House of Representatives passed on third and final reading a bill
allowing foreign equity into the rural banking system.
In a statement Thursday, the House of Representatives said House Bill
5360 seeks to amend Section 4 of Republic Act 7353 or the Rural Banks
Act of 1992 to open new source of equity infusion for rural banks,
allowing non-Philippine citizens to become members of the board of
directors.
Under Section 4 of RA7353, only Philippines citizens should own and hold
directly and indirectly the capital stock of rural banks.
"With the restriction, rural banks remain the only category of domestic
banks that is not allowed any foreign equity," said Rep. Sergio Apostol
(2nd District, Leyte), who chair's the House committee on banks and
financial intermediaries.
"The State recognizes the need to promote comprehensive rural
development to attain a more equitable distribution of opportunities,
income and wealth, a sustained increase in the amount of goods and
services produced by the nation for the benefit of the people," Apostol
noted.
Government helps and encourages the establishment of a rural banking
system design to make credit available and accessible in rural areas at
reasonable terms, Apostol noted.
With House Bill 5360, non-Filipinos may buy and own up to 40 percent of
a rural bank's authorized capital stock.
"The bill provides that non-Filipino citizens may become members of the
board of directors of a rural bank to the extent of their foreign
participation in the equity of the bank," said Apostol.
Rep. Pedro Romualdo (Lone District, Camiguin), who authored the bill,
said foreign investment in the rural banking sector should pave the way
for a sustained competitive and vigorous banking system.
According to the Camiguin representative, "the rural bank industry plays
a pivotal role in meeting and sustaining the needs of various sectors of
the local economy such as the business sector, agriculture and fisheries
sector, micro-enterprises and small [businesses]."
"The banking industry is one of the engines of development in the
country, but most universal and top banks are operating in highly
urbanized areas and in economically viable towns to the prejudice of
depressed areas," Romualdo noted.
"The amendment in the rural banking policy is a positive step towards a
better banking environment, allowing the rural banks to expand their
services, modernize their facilities and hire highly competent personnel
to handle their operations and services," Romualdo added.
House Bill 5360 tasks the Bangko Sentral ng Pilipinas to prescribe the
necessary rules and regulations on the amendments of the Rural Bank Act,
in consultation with various stakeholders, and distribute the entry of
foreign equity into the rural banking system. — CMA/VS, GMA News
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