Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City, Metro Manila 
TWENTIETH CONGRESS 
First Regular Session 
House Bill No. 2592 
Introduced by Representative FELIMON M. ESPARES 
AN ACT  
PROVIDING FOR THE REGISTRATION, REGULATION, 
AND OPERATION OF COOPERATIVE BANKS 
EXPLANATORY NOTE 
Based on data from the Bangko Sentral ng Pilipinas, there are 21 registered 
cooperative banks as of July 2025. This figure underscores the urgent need to provide 
cooperative banks with the necessary legislative support to strengthen and expand their 
presence across the country. 
The role of cooperative banks in community building cannot be overemphasized. 
Unlike commercial banks, cooperative banks are owned and financed by primary 
cooperatives and Samahang Nayon, which are funded through small shareholdings from 
farmers, fisherfolk, micro-entrepreneurs, and small traders. This structure exemplifies the 
strength of community ownership, offering a people-centered alternative to the typically 
impersonal and profit-driven commercial banking sector. 
Notably, primary cooperatives rely on cooperative banks to access capital, which is 
then used to finance their own loan programs for members. At the end of each fiscal year, 
the net savings generated by cooperative banks is returned to their member-owners, 
reflecting a mutually beneficial relationship and the co-existence of both arms of the 
cooperative sector. 
Indeed, cooperative banks have been active partners in government poverty 
alleviation efforts, especially in rural and underserved areas, as they extend financial 
services even to the “unbankable” sectors and helping jumpstart small businesses and other 
economic opportunities. 
Thus, this proposed legislation aims to make cooperative banks more responsive to 
these evolving challenges by enhancing their legal and institutional framework, thereby 
empowering them to play a more meaningful and sustainable role in the cooperative sector 
and the broader national economy. 
July 30, 2025
10:17 am


In view of the foregoing, the immediate passage of this bill is earnestly sought. 
HON. FELIMON M. ESPARES 


Republic of the Philippines 
HOUSE OF REPRESENTATIVES 
Quezon City, Metro Manila 
TWENTIETH CONGRESS 
First Regular Session 
House Bill No. 2592 
Introduced by Representative FELIMON M. ESPARES 
AN ACT  
PROVIDING FOR THE REGISTRATION, REGULATION, 
AND OPERATION OF COOPERATIVE BANKS 
Be it enacted by the Senate and House of Representatives of the Philippines in Congress 
assembled: 
CHAPTER I 
DECLARATION OF POLICY AND DEFINITIONS 
SECTION 1. Title. - This Act shall be known as the "Cooperative Banking Act". 
1 
2 
SEC. 2. Declaration of Policy. - It is the declared policy of the State to foster 
3 
the creation and growth of cooperatives to promote self-reliance, communal unity and 
4 
the attainment of economic development and social justice. The State shall encourage 
5 
the private sector to undertake the actual formation and organization of cooperatives 
6 
and shall create an atmosphere that is conducive to the growth and development of 
7 
these cooperatives. 
8 
9 
Further, it is hereby declared the policy of the State to: 
10 
11 
a.
Recognize Cooperative Banks (CBs) as practical vehicles for the promotion of
12 
self-reliance and economic development and the attainment of social justice;
13 
b.
Encourage thrift and savings mobilization for the achievement of sustainable
14 
economic development primarily among cooperatives and their members; and
15 
c.
Regulate and supervise the activities of CBs in order to achieve sound, stable,
16 
sustainable, and efficient operations for the protection of the public interest.
17 
Towards these ends, the Government shall encourage and assist in the 
18 
establishment of CBs in order to make credit facilities available and readily accessible 
19 
to the public on reasonable terms. 
20 
21 
SEC. 3. Definition of Terms. – As used in this Act: 
22 
a. Cooperative Bank refers to a bank organized under this Act and under the
23 
provisions of Republic Act No. 9520, otherwise known as “The Philippine
24 
Cooperative Code of 2008”, and prior laws, for the primary purpose of
25 
providing a wide range of financial services to cooperatives and their members
26 


 
 
and the public, and which was issued by the Bangko Sentral ng Pilipinas 
1 
(BSP) a license to operate as such, the majority shares of which are owned and 
2 
controlled by the cooperative organizations; 
3 
 
4 
b. Cooperative organization refers to any cooperative whether primary, 
5 
secondary, tertiary, or a special type of cooperative registered under the 
6 
provisions of the Cooperative Code and Republic Act No. 10744, otherwise 
7 
known as the “Credit Surety Fund Cooperative Act of 2015”;  
8 
 
9 
c. Samahang Nayon and Municipal Katipunan ng mga Samahang Nayon refer 
10 
to pre-cooperative organizations established under Presidential Decree No. 
11 
175 on “Strengthening the Cooperative Movement”.  
12 
 
13 
CHAPTER Il 
14 
 
15 
ORGANIZATION 
16 
 
17 
SEC. 4. Organization and Membership. - The organization and membership 
18 
of a CB shall be governed by the following: 
19 
 
20 
a. Organization — At least fifteen (15) cooperative organizations duly 
21 
established and registered under the Cooperative Code may register a CB 
22 
with the Cooperative Development Authority (CDA), upon compliance with 
23 
the requirements of and required authorization from the BSP; 
24 
b.   Membership — Membership in a CB shall be open to: 
25 
 
26 
(1)  cooperatives of all types and categories; 
27 
 
28 
(2)  foreign cooperatives; 
29 
 
30 
(3)  pre-cooperative organizations established under Presidential Decree No. 
31 
175; and 
32 
 
33 
(4)  individuals. 
34 
 
35 
Membership in a CB is either regular or associate. Regular membership shall be 
36 
limited to cooperative organizations and individuals who are members of a domestic 
37 
cooperative or foreign cooperative. Associate members shall be pre-cooperative 
38 
organizations established under Presidential Decree No. 175 and individuals who are 
39 
subscribing and holding preferred shares only. 
40 
 
41 
The common shareholdings of local cooperative organizations shall at all times 
42 
be at least sixty percent (60%) of the total outstanding voting shares of the CB. Common 
43 
shares held by individuals who are members of a cooperative and foreign cooperatives 
44 
shall not be more than forty percent (40%) of the total outstanding voting shares: 
45 
Provided, That the common shareholdings of each individual who is a member of a 
46 
cooperative shall not be more than five percent (5%) of the total outstanding voting 
47 
shares. 
48 


 
 
SEC. 5. Establishment of Cooperative Banks. - The articles of cooperation 
1 
and by-laws of a CB or any amendment thereto shall be registered with the CDA only 
2 
when accompanied by a certificate of authority issued by the BSP.  
3 
 
4 
SEC. 6. Establishment of Branches and Other Offices. - The establishment 
5 
of branches, branch-lite units, or other banking offices shall be governed by the rules 
6 
and regulations of the BSP. The CB shall furnish the Authority with a copy of the 
7 
Certificate of Authority issued by the BSP. In no case shall a CB be prohibited or 
8 
restricted from establishing a branch in a province, city, or municipality, solely on the 
9 
ground that another CB already exists in the same area. 
10 
 
11 
CHAPTER III 
12 
 
13 
MANAGEMENT AND GOVERNANCE OF COOPERATIVE BANKS 
14 
 
15 
SEC. 7. Management of Cooperative Banks. - The management of the CBs 
16 
shall be governed by the rules and regulations to be promulgated by the BSP, in 
17 
consultation with the CDA. To maintain the quality of bank management and accord 
18 
appropriate protection to depositors and the public in general, the BSP shall prescribe 
19 
the fit and proper qualifications of bank directors and officers for the purposes of this 
20 
Section, giving due recognition to the unique nature and character of CBs. 
21 
 
22 
The number, composition, and term of the Board of Directors shall be defined in 
23 
the articles of cooperation and by-laws of the CB in accordance with the following 
24 
guidelines: 
25 
 
26 
a. Board and Committees. - The CB shall constitute, at a minimum, the Board 
27 
of Directors, Election Committee, and Audit Committee. 
28 
The Board of Directors shall be composed of at least five (5) but not more than 
29 
fifteen (15) members, at least one (1) of whom is an independent director. It 
30 
shall be entrusted with the management of the affairs of the CB. It shall be 
31 
responsible for the policy formulation, strategic planning, direction-setting 
32 
and activities of the CB. The members of the Board of Directors shall be 
33 
elected by the general assembly or representative assembly of the 
34 
cooperative. 
35 
 
36 
The Election Committee shall be responsible for the formulation and 
37 
implementation of election rules and guidelines. It shall supervise the 
38 
conduct of election and election-related activities, canvass and certify the 
39 
results of the election, and decide cases relative to such election, except those 
40 
involving the committee itself or its members. The members of the Election 
41 
Committee shall be elected by the general assembly or representative 
42 
assembly. 
43 
 
44 
The Audit Committee is a board-level committee which composition, 
45 
functions and responsibilities shall be in accordance with the existing 
46 
regulations of the BSP; Provided, That the Audit Committee shall have at 
47 
least one-third (1/3) but not less than two (2) members of the Board of 
48 


 
 
Directors as independent directors. Other board-level committees may be 
1 
created as may be directed by the BSP. 
2 
 
3 
Other committees may be created by the board of directors with powers, 
4 
functions, and responsibilities which shall be defined in the by-laws. 
5 
 
6 
b. Key Management Officers. - The key management officers shall be appointed 
7 
by the Board and shall include the President, Treasurer, Internal Auditor, and 
8 
Compliance Officer, or their equivalent ranks. The BSP shall prescribe the 
9 
qualifications and disqualifications of the key management officers. 
10 
 
11 
SEC. 8. Vacancy in the Board and Committees. - Any vacancy in the Board 
12 
of Directors, other than by removal or by expiration of term, may be filled by the vote of 
13 
at least a majority of the remaining directors, if still constituting a quorum; otherwise, 
14 
said vacancy must be filled by the general assembly in a regular or special meeting 
15 
called for that purpose. A director so elected to fill a vacancy shall serve only the 
16 
unexpired term of the predecessor in office. 
17 
 
18 
In case of vacancy in the committees, the Board, unless otherwise provided in the 
19 
by-laws, shall appoint a person to fill the same, subject to the provision that the person 
20 
appointed shall serve only for the unexpired portion of the term. 
21 
 
22 
SEC. 9. Compensation. - In the absence of any provision in the by-laws fixing 
23 
their compensation, the directors shall not receive any compensation except for 
24 
reasonable per diems: Provided, however, That the directors and officers shall not be 
25 
entitled to any per diem when, in the preceding calendar year, the CB reported a net 
26 
loss or had a dividend rate less than the official inflation rate for the same year. Any 
27 
compensation other than per diems may be granted to directors by a majority vote of 
28 
the members with voting rights at a regular or special general assembly meeting 
29 
specifically called for the purpose: Provided, That no additional compensation other 
30 
than per diems shall be paid during the first year of existence of the CB. 
31 
 
32 
In no case shall the total yearly compensation of directors exceed ten percent 
33 
(10%) of the net income of the CB during the preceding year. 
34 
 
35 
SEC. 10. Liability of Directors, Officers and Committee Members. - 
36 
Directors, officers, and committee members, who willfully and knowingly vote for or 
37 
assent to patently unlawful acts or who are guilty of gross negligence or bad faith in 
38 
directing the affairs of the CB or acquire any personal or pecuniary interest in conflict 
39 
with their duties as such directors, officers or committee members shall be liable jointly 
40 
and severally to the CB for the full amount of damages or personal gain resulting 
41 
therefrom. 
42 
 
43 
When directors, officers, or committee members attempt to or have acquired, in 
44 
violation of their duties, any interest or equity adverse to the cooperative in respect to 
45 
any matter which has been reposed in them in confidence, they shall, as a trustee for 
46 
the cooperative, be liable for damages and shall be accountable for double the profits 
47 
which otherwise would have accrued to the cooperative. 
48 
 
49 


 
 
SEC. 11. Disloyalty of Directors and Officers. - A director or officer who, by 
1 
virtue of the office, acquires a financial opportunity which should belong to the CB shall 
2 
be liable for damages and must account for double the profits that otherwise would have 
3 
accrued to the CB by refunding the same, unless the act was ratified by a two-thirds 
4 
(2/3) vote of all the members with voting rights. 
5 
 
6 
This provision shall be applicable notwithstanding the fact that the director or 
7 
officer used personal funds for the venture. 
8 
 
9 
SEC. 12. Dealings of Directors, Officers, Stockholders and Related 
10 
Interests (DOSRI). - Dealings with directors, officers, stockholders and related 
11 
interests of the CB shall comply with SEC. 36 of Republic Act No. 8791, otherwise 
12 
known as “The General Banking Law of 2000”. However, the limits on loans to dealings 
13 
of directors, officers, stockholders, and related interests shall not apply to loans, other 
14 
credit accommodations, or guarantees extended by a CB to its member primary 
15 
cooperatives. 
16 
 
17 
SEC. 13. Illegal Use of Confidential Information. - A director or officer, or 
18 
an associate of a director or officer, who, for one’s benefit or advantage or that of an 
19 
associate, makes use of confidential information that, if generally known, might 
20 
reasonably be expected to adversely affect the operations and viability of the CB, shall 
21 
be held: 
22 
a. Liable to compensate the CB for the direct losses suffered by the CB as a result 
23 
of the illegal use of information; and 
24 
 
25 
b. Accountable to the CB for any direct benefit or advantage received or yet to be 
26 
received by the associate, as a result of the transaction. 
27 
The CB shall take the necessary steps to enforce the liabilities and 
28 
accountabilities described herein. 
29 
 
30 
SEC. 14. Bond for Faithful Performance of Duties and Obligations. – 
31 
Every officer or employee handling funds, securities, or property on behalf of a CB shall, 
32 
before performing such duties, execute and deliver adequate and appropriate bond for 
33 
the faithful performance of one’s duties and obligations. 
34 
 
35 
SEC. 15. Quorum and Voting Rights. –  
36 
 
37 
(a) In the case of primary cooperatives, regular meetings of the Board of Directors 
38 
shall be held at least once a month. Special meetings may be held at any time: 
39 
 
40 
i. 
at the call of the Chairperson, upon prior written notice given at least 
41 
three (3) days prior to the date of said meeting; 
42 
 
43 
ii. 
or at the call of a majority of the members of the Board, upon prior written 
44 
notice given at least one (1) day before said meeting: Provided, That only 
45 
two (2) special meetings may be held in one (1) month. Notices may be sent 
46 
through electronic means, to the official contact number or email account 
47 
of the officers. 
48 


 
 
(b) A majority of the members of the Board shall constitute a quorum for the 
1 
conduct of business. 
2 
 
3 
(c) Each member of the Board shall only have one (1) vote, whether it be a primary 
4 
or secondary cooperative, irrespective of the share capital holdings of the member-
5 
cooperative. 
6 
 
7 
(d) Directors cannot attend by proxy at Board meetings.  
8 
 
9 
(e) Cooperatives may opt to allow meetings of the Board of Directors and members 
10 
of the different committees of the cooperative to be conducted either through physical 
11 
attendance or videoconferencing, or both, subject to the rules on sending notices, 
12 
quorum, and voting requirements as provided for in the By-laws. In the conduct of 
13 
meetings through videoconferencing, cooperatives shall adopt their own policies and 
14 
procedures which shall be included in their By-laws. 
15 
 
16 
CHAPTER IV 
17 
 
18 
GENERAL ASSEMBLY 
19 
 
20 
SEC. 16. Composition of the General Assembly. - The general assembly shall 
21 
be composed of regular members who are entitled to vote under the articles of 
22 
cooperation and by-laws of the CB. 
23 
 
24 
SEC. 17. Powers of the General Assembly. - The general assembly shall be the 
25 
highest policy-making body of the CB and shall exercise such powers as are stated in 
26 
the Cooperative Code, in the articles of cooperation, and in the by-laws of the CB. The 
27 
general assembly shall have the following exclusive powers which cannot be delegated: 
28 
 
29 
a. To determine and approve amendments to the articles of cooperation and by-
30 
laws; 
31 
 
32 
b. To elect or appoint the members of the board of directors, and to remove  
33 
them for cause; 
34 
 
35 
c. To approve developmental plans of the CB; 
36 
 
37 
d. To approve or disapprove proposals from the Board of Directors pertaining to 
38 
external borrowings, investments, grants, donations, and other forms of 
39 
financial assistance, when the amounts involved are material or if they exceed 
40 
one hundred percent (100%) of the CB’s equity; and, 
41 
 
42 
e. To serve as the final arbiter in resolving all issues and dispute pertaining to 
43 
membership within the CB.  
44 
 
45 
Subject to such other provisions of the Cooperative Code and only for purposes of 
46 
prompt and intelligent decision-making, the general assembly may, by a three-fourths 
47 
(3/4) vote of all its members with voting rights present and constituting a quorum, 
48 


 
 
delegate some of its powers to a smaller body of the CB. These powers shall be 
1 
enumerated under the by-laws of the CB. 
2 
 
3 
SEC. 18. Meetings - A regular meeting shall be held annually by the general 
4 
assembly on a date fixed in the by-laws, or if not so fixed, on any date within one 
5 
hundred eighty (180) days after the close of each fiscal year: Provided, That notice of 
6 
regular meetings may be sent through personal delivery, registered mail, electronic 
7 
means, or such other manner as the BSP may allow under its existing regulations, to 
8 
all members of record, and posted in conspicuous places within the CB premises. 
9 
 
10 
Whenever necessary, a special meeting of the general assembly may be called at 
11 
any time by a majority vote of the Board of Directors or as provided for in the by-laws: 
12 
Provided, That a notice shall be sent one (1) week prior to the meeting to all members 
13 
who are entitled to vote: Provided, however, That a special meeting shall be called by 
14 
the Board of Directors after compliance with the required notice or by at least ten 
15 
percent (10%) of the total members who are entitled to vote to transact specific business 
16 
covered by the call. 
17 
 
18 
If the Board fails to call a regular or a special meeting within the given period, 
19 
the CDA shall, upon petition of ten percent (10%) of all the members of the CB who are 
20 
entitled to vote, and for good cause shown, shall issue an order to the petitioners 
21 
directing them to call a meeting of the general assembly by giving proper notice as 
22 
required in the Cooperative Code or in the by-laws. 
23 
 
24 
In the case of a newly approved CB, a special general assembly shall be called, as 
25 
far as practicable, within ninety (90) days from such approval. 
26 
 
27 
The CDA may call a special meeting of the CB for the purpose of reporting to the 
28 
members the result of any examination or investigation it has conducted on the affairs 
29 
of the CB.  
30 
 
31 
Notice of any meeting may be waived, expressly or impliedly, by any member. 
32 
 
33 
SEC. 19. Quorum and Voting System. - The quorum requirement for general 
34 
assembly meetings, whether special or regular, shall be one-half plus one of the number 
35 
of voting shares of all the members in good standing. 
36 
 
37 
To amend its articles of cooperation and by-laws, at least three-fourths (3/4) vote 
38 
of all the members with voting rights, present and constituting a quorum shall be 
39 
required. All other voting requirements shall be prescribed by the BSP. In the 
40 
alternative, the cooperative bank may opt to amend its Articles of Cooperation and By-
41 
laws through a referendum, subject to the guidelines to be issued by the Authority. 
42 
However, the vote requirement shall be two-thirds (⅔) vote of all the members in good 
43 
standing. 
44 
 
45 
The voting rights of the members shall be proportionate to the number of their 
46 
paid-up shares. 
47 
 
48 
 
49 
 
50 


 
 
CHAPTER V 
1 
 
2 
POWERS, FUNCTIONS, AND ALLIED UNDERTAKINGS 
3 
 
4 
SEC. 20. Powers and Functions of Cooperative Banks. – The CBs shall 
5 
primarily provide a wide range of financial services to cooperative organizations, their 
6 
members, and the public. A CB may perform any or all of the following banking services: 
7 
 
8 
a. 
Extend loans and advances primarily for the purpose of meeting the normal 
9 
credit needs of farmers, fishermen, or farm families as well as cooperatives, 
10 
merchants, and private and public employees: Provided, That loans and 
11 
advances granted to cooperative organizations shall not be subject to 
12 
individual ceilings on loans to DOSRI; 
13 
 
14 
b. 
Accept savings and time deposits; 
15 
 
16 
c. 
Act as correspondent of other financial institutions; 
17 
 
18 
d. 
Discount and rediscount paper with the Land Bank of the Philippines, 
19 
Development Bank of the Philippines or any other bank, including its 
20 
branches and agencies. Said banks shall specify the nature of paper deemed 
21 
acceptable for rediscounting, as well as the rediscount rate to be charged by 
22 
any of these banks;  
23 
 
24 
e. 
Act as collection agent;  
25 
 
26 
f. 
Act as official depository of local government units and other government 
27 
agencies or instrumentalities; 
28 
 
29 
g. 
Acquire readily marketable bonds and other debt securities; 
30 
 
31 
h. 
Buy and sell foreign exchange; 
32 
 
33 
i. 
Acquire shares of publicly listed companies;  
34 
 
35 
j. 
Act as conduit bank for the disbursement of government funds intended for 
36 
lending to agriculture, micro, small-medium enterprises (MSMEs) and 
37 
projects for local economic development; 
38 
 
39 
k. 
To be eligible to participate in government program allocations for 
40 
agricultural lending, social housing, loans to rural micro enterprises and 
41 
other initiatives towards inclusive growth; 
42 
 
43 
l. 
Offer financial technology services, such as digital lending and payment, and 
44 
digital wealth management, among others, subject to prior approval of the 
45 
BSP;  
46 
 
47 


 
 
 
1 
m. 
Participate in treasury and money market operations such as:  
2 
i. 
Repurchase Agreements with the BSP;  
3 
ii. 
Reverse Repurchase Agreements with the BSP;  
4 
iii. 
Overnight Lending Facility of the BSP; 
5 
iv. 
Overnight Deposits with the BSP; 
6 
v. 
Term Deposit Facility with the BSP; and, 
7 
vi. 
Sales and Marketing of Financial Products; 
8 
 
9 
n. 
Offer credit card services;  
10 
 
11 
o. 
Act as lending banks for credit surety fund cooperatives, as provided under 
12 
Republic Act No. 10744, otherwise known as the “Credit Surety Fund 
13 
Cooperative Act of 2015”;  
14 
 
15 
p. 
Act as depository bank of cooperatives with regard to their reserve funds, if 
16 
such banks exist in their area of operations; and, 
17 
 
18 
q. 
Offer other banking services as provided for in Section 53 of Republic Act No. 
19 
8791. 
20 
In addition to the powers granted to CBs by this Act and other existing laws, any 
21 
CB may perform any or all of the banking services offered by other types of banks subject 
22 
to the prior approval of the BSP. 
23 
 
24 
SEC. 21. Investment in Allied Undertakings. - Subject to the requirements 
25 
and restrictions as may be imposed by the Monetary Board under its existing rules and 
26 
regulations, CBs may invest in equities of allied undertakings which may include the 
27 
following: 
28 
 
29 
a. Banks, financial institutions and non-bank financial intermediaries, 
30 
including but not limited to insurance cooperatives and trust banks; 
31 
 
32 
b. Warehousing and other post-harvest facilities; 
33 
 
34 
c. Fertilizer and agricultural chemical and pesticides distribution; 
35 
 
36 
d. Farm equipment distribution; 
37 
 
38 
e. Trucking and transportation of agricultural products; 
39 
 
40 
f. 
Marketing of agricultural products; 
41 
 
42 
g. Leasing; 
43 
 
44 
h. Automated teller machine (ATM) networks; 
45 
 
46 
i. 
Public transportation; 
47 
 
48 


 
 
j. 
Financial technology; and 
1 
 
2 
k. Other undertakings as may be determined by the Monetary Board. 
3 
 
4 
SEC. 22. Limitations on Lending Authority. - Except as the Monetary Board 
5 
may otherwise prescribe, the direct indebtedness to CBs of any person, company, 
6 
corporation, or firm, including the indebtedness of members of a partnership and 
7 
association, for money borrowed, shall in no time exceed twenty five percent (25%) of 
8 
unimpaired capital and surplus of the CB.  However, the direct indebtedness mentioned 
9 
shall exclude loans secured by obligations of the BSP; loans fully guaranteed by the 
10 
Government as to the payment of principal and interest; loans to the extent covered by 
11 
the hold-out on, or assignment of, deposits maintained in the lending CB and held in 
12 
the Philippines; and other loans or credits as the Monetary Board may, from time to 
13 
time, specify as non-risk assets. 
14 
 
15 
CHAPTER VI 
16 
 
17 
CAPITALIZATION AND CAPITAL STRUCTURE 
18 
 
19 
SEC. 23. Capital Requirement for Cooperative Banks. - A CB shall have a 
20 
minimum paid-up capital in such amount as may be required by the BSP. The BSP may 
21 
prescribe rules and regulations on the types of shares a CB may issue, including the 
22 
terms thereof and rights appurtenant thereto to determine compliance with laws and 
23 
regulations governing capital and equity structure of banks: Provided, That CBs shall 
24 
issue par value shares only. 
25 
 
26 
SEC. 24. Barrio Savings Fund (BSF), Barrio Guarantee Fund (BGF), 
27 
Cooperative Development Loan Fund (CDLF), Cooperative Marketing Program 
28 
(CMP), and other funds administered by CDA. - In order to augment the 
29 
capitalization of CBs, the aforementioned funds collected or deducted by various CBs 
30 
throughout the country from the loan proceeds of farmer borrowers in compliance with 
31 
Presidential Decree No.175, which are still floating and outstanding either as active or 
32 
dormant accounts in the books of those banks, shall be converted as capital of the CB 
33 
located in the province where the depository banks of the BSF and BGF are located. 
34 
 
35 
SEC. 25. Samahang Nayon and Municipal Katipunan ng mga Samahang 
36 
Nayon. – The Samahang Nayon (SN) and Municipal Katipunan ng mga Samahang 
37 
Nayon (MKSN) which held common shares of CBs prior to the effectivity of Republic Act 
38 
No. 9520 shall apply for conversion to cooperatives in order to maintain their status as 
39 
regular members of CBs: Provided, That the CBs shall exert efforts to inform and assist 
40 
the SN and MKSN to convert within a period of five (5) years from the effectivity of this 
41 
Act. Upon failure of the SN and MKSN to finally convert to a cooperative within said 
42 
period, the funds held in the name of such SN and MKSN shall be considered as 
43 
preferred shares and shall remain as capital of the CB. Within six (6) months from the 
44 
conversion of preferred shares, the Cooperative Bank (CB) may, at its option, reclassify 
45 
such shares as treasury shares at the same value at which they were liquidated. 
46 
 
47 
SEC. 26. Additional Source of Capital of the CBs. - The funds or common 
48 
shares in CBs held in the name of cooperatives whose certificates of registration have 
49 


 
 
already been cancelled by the CDA shall remain as capital in said CBs and shall be 
1 
treated as preferred shares.  
2 
 
3 
CHAPTER VII 
4 
 
5 
SUPERVISION 
6 
 
7 
SEC. 27. Supervision of Cooperative Banks. - All CBs shall be under the 
8 
supervision of the BSP: Provided, however, That the CDA shall monitor the CBs' 
9 
compliance with cooperative laws, rules, and regulations. With respect to the 
10 
governance of the CBs, the provisions of the banking laws, rules, and regulations shall 
11 
prevail, notwithstanding Section 71 of Republic Act No. 8791. 
12 
 
13 
SEC. 28. Promulgation of Guidelines. – The BSP and CDA may formulate 
14 
guidelines to implement or clarify the provisions of the Act: Provided, That the BSP, as 
15 
the regulator of banks, shall be the primary regulator of cooperative banks consistent 
16 
with the provisions of Republic Act No. 8791: Provided, further, That in order to 
17 
minimize the burden of dually-regulated entities, the BSP shall, in consultation with 
18 
the CDA, in its promulgation of rules and regulations, to the extent allowed in banking 
19 
and other relevant laws, and insofar as consistent with the BSP’s exercise of supervisory 
20 
and regulatory powers over banks, consider the requirements of this Act and the CDA 
21 
for cooperatives in general. 
22 
 
23 
SEC. 29. Oversight Committee. –  There is hereby created a Joint 
24 
Congressional Oversight Committee (JCOC) to oversee, monitor, and evaluate the 
25 
implementation of this Act. The JCOC shall be composed of five (5) members each from 
26 
the House of Representatives and the Senate.  The JCOC shall be co-chaired by the 
27 
Chairpersons of the House Committee on Banks and Financial Intermediaries and the 
28 
Senate Committee on Banks, Financial Institutions and Currencies.  
29 
 
30 
            The Speaker and the Senate President shall designate the other four members 
31 
of the JCOC of the House and the Senate from among the members of the House 
32 
Committee on Banks and Financial Intermediaries and the Senate Committee on 
33 
Banks, Financial Institutions and Currencies, at least one (1) member of which shall be 
34 
from the minority. 
35 
 
36 
CHAPTER VIII  
37 
 
38 
PRIVILEGES AND INCENTIVES 
39 
 
40 
SEC. 30. Privileges of Cooperative Banks. - CBs registered under this Act and 
41 
the Cooperative Code shall have the following privileges and incentives: 
42 
 
43 
1. Those privileges and incentives accorded to cooperatives under the 
44 
Cooperative Code and other prior laws including exemption from all national, 
45 
city, provincial, municipal or barangay taxes, fees and charges of whatever 
46 
nature and description: Provided, however, That when a CB has reached an 
47 
undivided net savings of more than One hundred million pesos (P 
48 
100,000,000.00), transactions to non-member shall be taxable; 
49 
 
50 


 
 
2. The foreclosure of mortgages covering loans granted by CBs and executions of 
1 
judgment thereon involving real properties levied upon by a sheriff shall be 
2 
exempt from the publication in newspapers where the total amount of loan, 
3 
excluding interests due and unpaid, does not exceed One million pesos 
4 
(P1,000,000.00) or such amount as the Monetary Board may prescribe as may 
5 
be warranted by prevailing economic conditions. It shall be deemed sufficient 
6 
publication in such cases where the notices of foreclosure and execution of 
7 
judgment are posted in the most conspicuous areas such as the municipal 
8 
building, the municipal public market, the CB, and the barangay hall where 
9 
the land mortgaged is situated during the period of sixty (60) days 
10 
immediately preceding the public auction or execution of judgment. Proof of 
11 
publication as required herein shall be accomplished via an affidavit of the 
12 
sheriff or officer conducting the foreclosure sale or execution of judgment and 
13 
shall be attached to the records of the case; 
14 
 
15 
3. A CB shall be allowed to foreclose lands mortgaged to it subject to the 
16 
provisions of Republic Act No. 6657, otherwise known as the Comprehensive 
17 
Agrarian Reform Law of 1988. For agrarian lands foreclosed by a CB, the 
18 
disposal of the same to another qualified beneficiary under Republic Act No. 
19 
6557 shall be made through the same CB. Further, the amortization of the 
20 
beneficiary in favor of the Department of Agrarian Reform (DAR) shall be 
21 
coursed through the servicing CB: Provided, however, That CBs shall be 
22 
exempt from the landholding limits as prescribed by the DAR or any other law 
23 
requiring the same; 
24 
 
25 
4. For CBs granted by the BSP with accreditation as Rural Financial Institution 
26 
(RFI) under Republic Act No. 10000, the following privileges shall be awarded: 
27 
 
28 
a. Unrestricted branching rights to set-up agriculture-oriented branches 
29 
in 
unbanked 
municipalities 
and 
predominantly 
agricultural 
30 
communities, 
subject 
to 
existing 
regulations 
on 
minimum 
31 
capitalization for banks and the size of branch network; 
32 
 
33 
b. Automatic eligibility with Philippine Guarantee Corporation, with 
34 
respect to agricultural credit guarantee, Philippine Crop Insurance 
35 
Corporation, and governmental agencies providing services towards 
36 
risk-mitigation in the agriculture sector; 
37 
 
38 
c. Priority status as credit delivery partner or conduit of government 
39 
directed programs for agricultural projects through the Department of 
40 
Agriculture and other government agencies; and 
41 
 
42 
d. Entitlement to participate free of charge in capability-building 
43 
activities in agriculture lending such as the exchange of best-practice 
44 
experiences, study tour, technology transfer among ASEAN Member 
45 
States and other fora of international cooperation. 
46 
 
47 
5. Notwithstanding the provisions herein, privileges and incentives granted to 
48 
rural banks pursuant to Republic Act No. 7353, or the “Rural Act of 1992”, 
49 
shall also be granted to cooperative banks duly registered under this Act.  
50 


 
 
 
1 
SEC. 31. Separability Clause. - If any provision or section of this Act or the 
2 
application thereof to any person or circumstance is held invalid, the other provisions 
3 
or sections of this Act shall remain valid, and the application of such remaining 
4 
provisions or sections to the other persons or circumstances shall not be affected 
5 
thereby. 
6 
 
7 
SEC. 32. Repealing Clause. - All laws, issuances, rules, and regulations 
8 
inconsistent with this Act are hereby modified or amended accordingly. 
9 
 
10 
SEC. 33. Effectivity. - This Act shall take effect fifteen (15) days after its 
11 
publication in the Official Gazette or in a newspaper of general circulation. 
12 
 
13 
Approved, 
14 
 
15