NINETEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
S.B. No.
SENATE
649
of UiP !“>
72 JUL14 P4 -04
RHCEiVilD &v;
Introduced by SENATOR IMEE R. MARCOS
AN ACT PROVIDING FOR THE CREATION, ORGANIZATION, AND
OPERATION OF DIGITAL BANKS, AMENDING FOR THIS PURPOSE 
REPUBLIC ACT NO. 8791, OTHERWISE KNOWN AS 
"THE GENERAL BANKING LAW OF 2000"
EXPLANATORY NOTE
Article II, Section 20 of the 1987 Constitution provides that vthe State recognizes 
the indispensable role of the private sector, encourages private enterprise, and 
provides incentives to needed investments."
The restriction in movement brought about by the various levels of community 
quarantine resulted In an increase In digital transactions, as many Filipinos were forced 
to do their banking, bill payment, and purchases through online means. In 2020 alone, 
active e-money accounts surged by 93% to 34.7 million from 17.9 million a year 
earlier. As more people discover the advantages of online banking, online transactions 
are expected to be a part of the "new normal" even after the pandemic.
With the rise of online banking, a new business model that Is gaining traction Is 
digital banking, or the delivery of retail banking services exclusively through electronic 
channels. A digital bank relies solely on technology to complete Its transactions and 
operates without a physical branch. This banking model is expected to improve 
financial Inclusion by targeting the unbanked and underbanked segments of society 
by offering convenient access and less stringent documentary requirements. The 
presence of a digital financial account also facilitates credit score recording, allowing 
the underbanked access to financial services. Lastly, digital banks are able to offer 
higher Interest rates to deposits due to the elimination of overhead costs associated 
in maintaining physical offices, making them more attractive to depositors and 
fostering competition in the financial sector.
Digital banking, however, comes with inherent risks and challenges. Given its 
substantial reliance on technology, online banking Is prone to security risk. The 
security risk is a deterrent to digital banking participation. In spite of its convenience, 
a number 2 of people are still hesitant to use online banking transactions due to fears


of becoming a victim of cyber fraud. Another fraud-related concern is the ease in 
which digital banking transactions may be used for money laundering. The lack of 
face-to-face contact in digital banking transactions introduces a heightened level of 
risk to institutions, by making them vulnerable to unauthorized users accessing 
customer accounts.
Given the potential advantages of digital banking and the concerns associated 
with it, there is a need to establish a regulatory framework for digital banking that 
ensures the safety of these transactions. Currently, the BSP regulates digital banks via 
Circular No. 1105, dated December 2, 2022. This biH seeks to clearly define a digital 
bank as a type of bank under Republic Act No. 8791, otherwise known as the General 
Banking Law of 2000 C'GBL"), and, ultimately, institutionalize the regulatory powers 
of the BSP on digital banks. Necessarily, by doing so, this bill extends to digital banks 
the protection already accorded to conventional banks - such as applicable standards 
for security, risk management, and managerial propriety - and imposes the same 
penalties for unlawful actions recognized under the GBL. By expressly recognizing 
digital banks as within the scope of the GBL, digital bank deposits will likewise be 
made subject to deposit Insurance under Republic Act No. 3591, as amended. 
Ultimately, doing so will improve the uptake of digital banking services, promoting 
financial inclusion In the process.
Considering the state of the economy and the urgent need for financial services 
of both consumers and borrowers, the approval of this measure Is earnestly sought.
E R. MARCO


NINETEENTH CONGRESS OF THE) 
REPUBLIC OF THE PHILIPPINES ) 
First Regular Session 
)
SENATE
S.B. No. 649
P f'*., 
■}.
Vh2; ■ OJ ti’c ~
72 JUL14 P4:04
RlXEIVtD BV: _
Introduced by SENATOR IMEE R. MARCOS
AN ACT PROVIDING FOR THE CREATION, ORGANIZATION, AND 
OPERATION OF DIGITAL BANKS, AMENDING FOR THIS PURPOSE 
REPUBLIC ACT NO. 8791, OTHERWISE KNOWN AS 
"THE GENERAL BANKING LAW OF 2000"
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled:
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SECTION 1. Declaration of Policy. - It is the policy of the State to promote
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financial inclusion by' providing the regulatory and Institutional frameworks requisite
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for the development of safe, secure, accessible, and affordable financial products and
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services. Towards this end, the State shall provide a regulatory framework that will
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encourage the creation of stable, safe, and dependable digital banks which will
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develop the application of financial technology in the Philippines, as well as provide
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enhanced consumer experience.
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SEC. 2. Section 3.2 of Republic Act No. 8791, otherwise knovvn as "The General
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Banking Law of 2000", Is hereby amended to read as follows:
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"Section 3. Definition and Classification of Banks.
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3.1. "Banks" shall refer to entities engaged in the lending of funds obtained in
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the form of deposits.
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3.2. Banks shall be classified into:
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(a) Universal banks;
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(b) Commercial banks;
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(c) Thrift banks, composed of: (i) Savings and mortgage banks, (ii) Stock
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savings and loan associations, and (iii) Private development banks, as
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defined In the Republic Act No. 7906 (hereafter the "Thrift Banks Act");
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(d) Rural banks, as defined in Republic Act No. 73S3 (hereafter the "Rural Banks
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Act");


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(e) Cooperative banks, as defined in Republic Act No 6938 (hereafter the 
"Cooperative Code");
(f) Islamic banks as defined! in Republic Act No. 6848, otherwise known as the 
"Charter of A! Amanah Islamic Investment Bank of the Philippines”; and
(G) DIGITAL BANKS, OR BANKS WHICH DELIVER AND/OR OFFER 
RETAIL BANKING SERVICES, FINANCIAL PRODUCTS AND 
FINANCIAL SERVICES PRIMARILY THROUGH THE INTERNET OR 
OTHER FORMS OF ELECTRONIC CHANNELS INSTEAD OF PHYSICAL 
BRANCHES.
[(g)] (H) other classifications of banks as determined by the Monetary Board of 
the Bangko Sentral ng Pilipinas.
SEC. 3. Section 8 of Republic'Act No. 8791 is hereby amended to read as follows:
"Section 8. Organization. - lihe Monetary Board may authorize ihe organization 
of a bank or quasi-bank subject to the following conditions:
8.1 That the entity is a stock corporation;
8.2 That its funds are obtained from the public, which shall mean twenty (20) 
or more persons; and
8.3 That the minimum capital requirements prescribed by the Monetary Board 
for each category of banks are satisfied.
BANKS AND FINANCIAL INSTITUTIONS, INCLUDING EXISTING BANKS 
OPERATING IN THE PHILIPPINES, AND NON-FINANCIAL 
ir^STITOTIOHS, INCLUDING TECHNOLOGY COMPANIES, MAY BE 
AUTHORIZED BY THE MONETARY BOARD TO OWN AND OPERATE A 
DIGITAL BANK, SUBJECT TO SUBMISSION OF SUFFICIENT EVIDENCE 
SATISFACTORY TO THE MONETARY BOARD, AND SUBJECT TO SUCH 
REQUIREMENTS THAT MAY BE PRESCRIBED BY THE MONETARY 
BOARD, THAT THE OWNERS AND PARENT COMPANIES OF A DIGITAL 
BANK ARE CAPABLE OF PROVIDING STROMG FINANCIAL, 
TECHNOLOGICAL AND OTHER NECESSARY SUPPORT. THE MINIMUM 
CAPITAL REQUIREMENT FOR DIGITAL BANKS THAT MAY BE 
PRESCRIBED BY THE MONETARY BOARD SHOULD NOT BE LOWER 
THAN ONE BILLION PESOS (PHP1,000,000,000.00).
No new commercial bank shall be established within three (3) years from the 
effectivity of this Act. In the exercise of the authority granted herein, the 
Monetary Board shall take into consideration their capability in terms of their 
financial resources and technical expertise and integrity. The bank licensing 
process shall incorporate an assessment of the bank's ownership structure.


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directors and senior management, its operating plan and internal controls as well
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as its projected financial condition and capital base."
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SEC. 4. Section 20 of Republic Act No. 8791 is hereby amerided to read as
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follows:
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"Section 20. Bank Branches. - Universal or commercial banks may open
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branches or other offices within or outside the Philippines upon prior approval of
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the Bangko Sentrai. DIGITAL BANKS MAY NOT OPEN, OTHER THAN THE
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LOCAL OFFICE REQUIRED UNDER THIS ACT, ANY OTHER PHYSICAL
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BRANCH, SUB-BRANCH OR BRANCH-LITE UNIT THROUGH WHICH
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RETAIL BANKING SERVICES, FINANCIAL PRODUCTS AND FINANCIAL
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SERVICES WILL BE OFFERED. Branching by all other banks shall be governed
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by pertinent laws.
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A bank OTHER THAN A DIGITAL BANK may, subject to prior approval of the
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Monetary Board, use any or all of its branches as outlets for the presentation
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and/or sale of the financial products of its allied undertaking or of Its investment
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house units. A bank authorized to establish branches or other offices shall be
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responsible for all business conducted in such branches and offices to the same
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extent and In the same manner as though such business had all been conducted
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in the head office. A bank ana its branches and offices sha-i be treated as one
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unit."
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SEC. 5. A new Article III (entitled "Operations of Digital Banks") and
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corresponding Sections 33 to 35 are hereby inserted under Chapter IV (Deposits,
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Loans and Other Operations) of Republic Act No. 8791, Immediately after Section 32
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thereof, and will read as follows:
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"ARTICLE III - OPERATIONS OF DIGITAL BANKS
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SECTION 33. POWERS OF A DIGITAL BANK. - A DIGITAL BANK SHALL
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HAVE THE AUTHORITY TO EXERCISE, IN ADDITION TO THE GENERAL
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POWERS INCIDENT TO CORPORATIONS, ALL SUCH POWERS AS MAY
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BE NECESSARY TO CARRY ON THE BUSINESS OF DIGITAL BANKING,
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SUCH AS:
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(a) ACCEPT SAVINGS AND TIME DEPOSITS;
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(b) ACT AS A COLLECTION AGENT FOR GOVERNMENT ENTITIES;
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(c) GRANT LOANS, WHETHER SECURED OR UNSECURED;
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(d) EXTEND CREDIT FACILITIES TO PRIVATE AND GOVERNMENT
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EMPLOYEES;
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(e) ISSUE MORTGAGE AND CHATTEL MORTGAGE CERTIFICATES, BUY
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AND SELL THEM FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF


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OTHERS, OR ACCEPT AND RECEIVE THEM IN PAYMENT OR AS 
AMORTIZATION OF ITS LOAN;
(f) ACT AS CORRESPONDENT FOR OTHER FINANCIAL INSTITUTIONS;
(g) INVEST IN READILY MARKETABLE BONDS AND OTHER DEBT 
SECURITIES, COMMERCIAL PAPERS AND ACCOUNTS RECEIVABLE, 
DRAFTS, BILLS OF EXCHANGE, ACCEPTANCES OR NOTES ARISING 
OUT OF COMMERCIAL TRANSACTIONS; AND
(h) PURCHASE, HOLD AND CONVEY REAL ESTATE UNDER THE SAME 
CONDITIONS AS THOSE GOVERNING COMMERCIAL BANKS.
A DIGITAL BANK MAY ALSO PERFORM OTHER POWERS AND 
FUNCTIONS AS MAY BE GRANTED TO OR RECOGNIZED, AND SUBJECT 
TO SUCH CONDITIONS AMD RULES AS MAY BE PRESCRIBED BY, THE 
MONETARY BOARD.
SECTION 34. PHYSICAL PRESENCE IN THE PHILIPPINES, - A DIGITAL 
BANK APPLICANT MUST MAINTAIN A PHYSICAL OFFICE IN THE 
PHILIPPINES, WHICH SHALL BE CONSIDERED AS ITS PRINCIPAL 
PLACE OF BUSINESS, WILL HOUSE ITS MANAGEMENT AND SUPPORT 
OPERATIONS, AND SERVE AS ITS LOCAL TCUCHPOINT FOR 
INTERFACING WITH, AND RECEIVING AND RESOLVING COMPLAINTS 
BY, THE MONETARY BOARD AND CUSTOMERS."
SECTION 35. PROMOTION OF FINANCIAL INCLUSION, - IN ORDER TO 
ACTIVELY PROMOTE FINANCIAL INCLUSION, A DIGITAL BANK SHALL 
NOT IMPOSE MINIMUM ACCOUNT BALANCE REQJIREMENTS FOR 
DEPOSIT ACCOUNTS.
A MINOR IN HIS OR HER OWN RIGHT AND NAME MAY, SUBJECT TO 
THE RULES AND REGULATIONS THAT MAY BE PRESCRIBED BY THE 
MONETARY BOARD, OPEN AN ACCOUNT WITH A DIGITAL BANK, MAKE 
DEPOSITS AMD WITHDRAWALS FROM SUCH DEPOSITS, AND RECEIVE 
DIVIDENDS AND INTEREST, AS THE CASE MAY BE.
SECTION 36. CONTINUING REVIEW OF TECHNOLOGY RISK 
MANAGEMENT, - A DIGITAL BANK SHALL ESTABLISH PROCEDURES 
FOR REGULAR REVIEW OF ITS SECURITY AND TECHNOLOGY RELATED 
ARRANGEMENTS TC ENSURE THAT SUCH ARRANGEMENTS REMAIN 
APPROPRIATE, HAVING REGARD TO THE CONTINUING 
DEVELOPMENTS IN TECHNOLOGY. THE MONETARY BOARD SHALL 
ALSO BE AUTHORIZED TO PERFORM, PERIODICALLY AND/OR FROM 
TIME TO TIME, BOTH RANDOM AND SCHEDULED AUDITS OF THE 
SECURITY OF EXISTING DIGITAL BANKS INFORMATION TECHNOLOGY 
GOVERNANCE AND SYSTEMS.


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SEC. 6. Renumbering Clause. - Article III entitled "Provisions Applicable to All
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Banks, Quasi-Banks, and Trust Entities" and Sections 33 to 97 of Republic Act No.
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8791 shall be renumbered accordingly.
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SEC. 7. Annual Report. - The Monetary Board shall submit a report to the
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Congress of the Philippines at the end of each calendar year of all the rules and
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regulations promulgated by it In accordance with the provisions of this Act, as well as
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its other actuations in connection with digital banks together with an explanation of
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its reasons therefor and recommendations on legislative actions.
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SEC. 8. Transitory Provisions. - Existing digital banks or digital banking services
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which were authorized by the Monetary Board prior to the effectivity of this Act shall
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be given one hundred and eighty (180) days to comply with rules and regulations set
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by the BSP pursuant to this Act. No further digital banking licenses shall be issued by
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the BSP in the period between the effectivity of this Act and the issuance of applicable
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rules and regulations pursuant to this Act.
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SEC. 9. Implementing Rules and Regulations. - The BSP shall promulgate the
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necessary rules and regulations, or amend Its existing rules governing and/or
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regulating digital banks, within ninety (90) working days from the effectivity of this
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Act.
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SEC. 10. Separability Clause. - If any portion or provision of this Act is declared
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unconstitutional, the remainder of this Act or any provision not affected thereby shall
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remain In force and effect.
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SEC. 11. Repealing Clause. - All provisions of existing laws, orders, rules and
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regulations or parts thereof which are in conflict or inconsistent with tiie provisions of
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this Act are hereby repealed, amended or modified accordingly.
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SEC. 12. Effectivity. - This Act shall take effect after fifteen (15) days following
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the completion of its publication either in the Official Gazette or in a newspaper of
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general circulation In the Philippines.
Approved,