Rural banking opened to foreigners
THE SENATE LAST NIGHT ratified a reconciled bill allowing foreigners to
take a majority stake in rural banks, amending a law that for more than
two decades limited ownership to Filipinos.
The House of Representatives, which did not take up the measure
yesterday, essentially has until Feb. 6 to act if it wants to pass the
bill before an election break. Congress officially goes on recess on
Feb. 8 but plenary sessions are only held from Monday to Wednesday.
A bicameral committee yesterday morning decided to adopt Senate Bill
3282's main provision of allowing foreigners to own, acquire or purchase
up to 60% of voting stock in a rural bank. House Bill 5360 proposed a
maximum stake of 40%.
Republic Act (RA) 7353 or the Rural Banks Act of 1992 provides that "the
capital stock of any rural bank shall be fully owned and held directly
or indirectly by citizens of the Philippines or corporations,
associations or cooperatives qualified under Philippine laws to own and
hold such capital stock."
Foreigners can own up to 40% of universal and commercial banks, hewing
to RA 8791 or the General Banking Act that states that "foreign
individuals and non-bank corporations may own or control up to 40% of
the voting stock of a domestic bank."
RA 7906 or the Thrift Banks Act, meanwhile, allows foreigners to own up
to 60% of the voting stock of thrift banks.
Senator Sergio R. Osmeña III, chairman of the banks, financial
institutions and currencies committee, said in his sponsorship speech of
SB 3282 last September that allowing foreigners to invest in rural banks
would allow the expansion of services to farmers, microentrepreneurs,
small and medium enterprises and rural folk.
The central bank has also expressed support for the lifting of foreign
ownership restrictions in RA 7353 as this would help strengthen rural
banks, which have been known to collapse due to mismanagement.
A total of 24 banks were shuttered by the Monetary Board and placed
under the Philippine Deposit Insurance Corp. receivership last year.
Most were rural banks.
In a text message yesterday, Mr. Osmeña said the measure would "invite
foreign investments, if they so desire."
Edward Leandro Z. Garcia, president of Rural Banks Association of the
Philippines, said: "We welcome this development as a boost to the
industry." He claimed that "several financial institutions" had already
expressed interest in rural bank stakes.
The reconciled bill ratified by the Senate will allow non-Filipinos to
sit on the board of a rural bank.
It will also allow a rural bank to foreclose on lands covered by the
Comprehensive Agrarian Reform Program that were mortgaged to it. These
lands, however, remain subject to the agrarian reform law's retention
limits.
"Rural banks which are not qualified to acquire or hold land in the
Philippines shall be allowed to bid and take part in foreclosure sales
of real property mortgaged to them, as well as to avail of enforcement
and other proceedings, and accordingly to take possession of the
mortgaged property, for a period not exceeding five years from actual
possession...," the bill also states.
Rural banks that acquire mortgaged property must transfer this to a
"qualified Philippine national."
By law, foreigners are not allowed to own land in the Philippines.
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CARLOS ANI - Consultant
Chairman of the Board - SEEDFINANCE Corporation
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