THIRTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
1 
First Regular Session 
) 
S E N A T E  
s. No. 
Introduced by Senator S. R. Osmefia 111 
EXPLANATORY NOTE 
Thrift banks cater to the majority of the population availing the formal 
banking system. Large banks often ignore the clientele of thrift banks which is 
composed mainly of small and medium scale businessmen, consumer, retail and 
small enterprise groups, due to the low margins that can be gained from such 
transactions not to mention the administrative cost that will be even more that the 
potential gain. 
Thrift banks play a vital role for small enterprises which has more potential 
for employment generation and economic growth and therefore, help provide a 
self-sufficient industrial foundation for the country. 
As of 2003, there are 92 thrift banks with about 1,200 banking offices 
distributed nationwide, serving mainly the needs of the majority of the populace, 
mainly the small a j d  medium enterprises, the consumers and small savers and 
cou ntrygde entre pkeneu rs . 
This bill seeks to amend Republic Act 7906, the governing law on thrift 
banks. It aims to encourage more investments in thrift banks, thereby allowing 
them to become more effective in their financial operations. 
In view of the foregoing, passage of this bill is earnestly requested. 
SERGIO OSMERA 111 
Senator 


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THIRTEENTH CONGRESS OF THE REPUBLIC 
) 
OF THE PHILIPPINES 
1 
First Regular Session 
) 
- ~- 
-. . 
S E N A T E  
s. No. 
Introduced by Senator S. R. Osmefia 111 
AN ACT 
LIBERALIZING THE OPERATIONS OF THRIFT BANKS AMENDING FOR THE 
PURPOSE THE THRIFT BANKS ACT of 1995 AND FOR OTHER PURPOSES 
Be it enacted by the Senate and the House of Representatives of the Republic of 
the Philippines in Congress assembled: 
Section 1. Section 8 of Republic Act No. 7906 otherwise known as the 
Thrift Banks Act of 1995 is hereby amended to read as follows: 
"SECTION 8.Ownership. - At least forty percent (40%) of 
the voting stock of a thrift bank which may be established after the 
approval of this Act shall be owned by citizens of the Philippines, 
except where a new bank may be established as a result of a 
merger or consolidation of existing thrift banks with foreign holdings 
in which case, the resulting foreign holdings shall not be increased 
but may be reduced and, once reduced, shall not be increased 
thereafter 
--. 
beyond sixty percent (60%) of the voting stock of thrift 
banks. The percentage of the foreign-owned voting stocks shall be 
determined by the citizenship of individual stockholders and in case 
of corporations owning shares, by the citizenship .of each 
stockholder in the said corporations. 
Any 
provision 
of 
existing 
laws 
to 
the 
contrary 
notwithstanding, [stockholdings] EQUITY in a thrift bank shall be 
.
.
 
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exempt from any ownership ceiling [ for a period of ten ( I O )  years 
from ] upon the effectivity of this Act. 
IN ORDER TO ENCOURAGE FOREIGN INVESTMENTS IN 
COUNTRYSIDE 
DEVELOPMENT, 
FOREIGN 
MAJORITY 
OWNERSHIP IN THRIFT BANKS IS HEREBY ALLOWED." 
SEC. 2. Section 10 of the same Act is hereby amended to read as follows: 
"SECTION IO. 
Powers of Thrift Banks. - 
In addition to 
powers granted it by this Act and existing laws, any thrift bank may: 
- 
.- . 
X 
X 
x 
- -  
(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] ENTITLED to directly 
clear its demand deposit operations with the Bangko Sentral and 
the Philippine Clearing House Corporation; 
X 
X 
X 
(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), (9) 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, 
AS 
PROVIDED 
IN 
REPUBLIC 
ACT 
8791, 
OTHERWISE KNOWN AS THE GENERAL BANKING LAW OF 
-- 
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2000, 
EXCEPT 
THE 
SERVICES 
ENUMERATED 
UNDER 
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SUBSECTIONS (a), (c), (9, (h), (j), (k), AND (m), WHICH A THRIFT 
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MONETARY BOARD. 
BANK CAN PERFORM WITHOUT PRIOR APPROVAL FROM THE 
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NEW 
EQUITY 
INVESTMENTS 
IN 
NON-ALLIED 
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ACTIVITIES MAY BE ALLOWED IN ORDER TO OPERATE A 
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FORECLOSED ASSET 
OR 
REHABILITATE A 
BUSINESS 
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ACTIVITY.." 
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follows: 
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"SECTION 12. 
Investment in Allied Undertakings. - 
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Subject to such guidelines as may be established by the Monetary 
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Board, thrift banks may invest in equities of allied undertakings as 
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hTreinafter GKumerated: Provided, That: (a) the total investments in 
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equities shall not exceed twenty-five percent (25%) of the net worth 
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of the thrift bank; (b) the equity investment in any single enterprise 
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shall be limited to fifteen percent (15%) of the net worth of the thrift 
IS 
bank; [ (c) the equity investment in any single enterprise shall 
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remain a minority holding in that enterprise;] and [(d)] (c) the equity 
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investment in other banks shall be subject to the same provisions 
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governing similar investments of commercial banks and shall be 
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deducted from the investing bank's net worth for the purpose of 
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computing of the prescribed ratio as provided in Section 9 hereof: 
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Provided, further, That equity investments shall not be permitted in 
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non-related activities. 
Where the allied activity is a wholly- or 
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majority-owned subsidiary of the thrift bank, the Bangko Sentral 
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may subject it to examination. 
2s 
WITH SPECIFIC AUTHORITY FROM THE MONETARY 
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BOARD, A THRIFT BANK MAY BE ALLOWED TO OWN UP YO 
SEC. 3. Section 12 of the same Act are hereby amended to read as 
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ONE HUNDRED PERCENT (100%) OF THE EQUITY IN AN 
ALLIED ENTERPRISE. 
WITH RESPECT TO INVESTMENTS IN SUBSIDIARIES 
EXISTING AT THE EFFECTIVITY OF THIS ACT, THRIFT BANKS 
SHALL BE ALLOWED TO MAINTAIN THESE INVESTMENTS. 
., 
. 
, 
Investment in allied undertaking shall include institutions 
engaged in the following activities: 
(a) 
Banking and financing; 
(b) 
(c) 
Fertilizer and agricultural chemical and pesticides 
Warehousing and other post-harvesting activities; 
distribution; 
(d) 
Farm equipment distribution; 
(e) 
(f) 
Marketing of agricultural products; 
(9) 
Leasing; and 
(h) 
Trucking and transportation of agricultural products; 
Other undertakings as may be determined by the Monetary 
Board ." 
SEC. 4. Section 17 of the same Act is hereby amended to read as follows: 
Tax Exemptions. - All thrift banks, whether 
created or organized under this Act or in operation as of the date of 
effectivity of this Act, shall be exempt from the payment of all taxes, 
TARIFFS, DUTIES, fees and charges of whatever nature and description, 
except the corporate income taxes and local taxes, fees and charges for a 
period of five (5) years, counted from the date of commencement of 
operations for thrift banks created under this Act and from the date . .  of the 
. 
. 
effectivity of this Act for existing thrift banks." 
SEC. 5. Section 18 of the same Act is hereby amended to read as follows: 
"SECTION 18. 
Exemption 
from 
Publication 
Requirement. - The foreclosure of mortgage covering loans 
SECTrdN 17. 
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granted by thrift banks and executions of judgments thereon 
involving real properties and levied upon by a sheriff shall be 
exempt from publication requirements where the total amount of the 
loan, excludjng interest due and unpaid, does not exceed [One 
hundred thousand pesos (PlOO,OOO)] ONE MILLION PESOS 
(Pl,OOO,OOO.OO) 
or such amount as the Monetary Board may 
prescribe, as may be warranted by the prevailing economic 
conditions and by the nature of service of customers served by 
each category of the thrift bank. It shall be sufficient publication in 
such cases if the notice of foreclosure and execution of judgment 
are posted in the conspicuous area of a thrift bank's premises, 
municipal building, the municipal public market, the barangay hall, 
and the barangay public market, if there be any, where the land 
mortgaged is situated within a period of sixty (60) days immediately 
preceding the public auction of the execution of judgment. Proof of 
publication as required herein shall be accomplished by an affidavit 
of the sheriff or officer conducting the foreclosure sale or execution 
of judgment and shall be attached with the records of the case. 
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A thrift bank shall be allowed to foreclose lands mortgaged 
to it; Provided, That said lands shall be covered under Republic Act 
No. 6657. 
SEC. 6. CHAPTER VI1 is hereby amended by adding new provisions after 
Sec. 20 to be known as Sec. 20-A, 20-8 and 20-C to lead as follows: 
~~sEZ-ZO-A. 
ALLOWABLE DEDUCTION FOR INTEREST 
-- . 
EXPENSES. - THERE WILL BE NO LIMIT TO THE ALLOWABLE 
DEDUCTION FOR INTEREST EXPENSE THAT 
MAY BE 
CLAIMED BY THRIT BANKS. 
SEC. 
20-B. 
EXEMPTION 
OF 
FORECLOSED 
AGRICULTURAL 
ASSETS 
FROM 
CAP 
COVERAGE. - 
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AGRICULTURAL ASSETS ACQUIRED BY BANKS THROUGH 
FORECLOSURE SHALL BE EXEMPTED FROM THE COVERAGE 
OF THE AGRARIAN REFORM LAW AND SAME BANKS ARE 
HEREWITH 
ALLOWED 
TO 
SELL 
SAID 
ACQUIRED 
AGRICULTURAL ASSETS TO INTERESTED PARTIES. 
SEC. 20-C. COMPLIANCE WITH AGRI-AGRA CREDIT - 
THE 
AGRI-AGRA 
MANDATORY 
CREDIT 
ALLOCATION 
REQUIRED UNDER PD 717 SHALL BE PEGGED AT FIFTEEN 
PERCENT US%) 
~- COMBINED AGRI-AGRA FOR THRIFT BANKS." 
-. - 
SEC. 7. This Act shall take effect fifteen (15) days from the date of its 
publication in at least two (2) national newspapers of general circulation. 
Approved, 
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