13th CONGRESS OF THE REPUBLIC) 
OF THE PHILIPP 
) 
First Regular Session 
1 
Introduced by Senator Magsaysay, Jr. 
EXPLANATORY NOTE 
The National Government has been campaigning for poverty eradication of 32 
million Filipinos in the poverty line. However, poverty, which resides mainly in the rural 
areas, cannot be eradicated simply with the intlux of foreign investments and the 
revitalization of export-oriented industries. Without discounting the value of these 
efforts, their benefits seldom trickle down to the lowest levels of society. Poverty 
eradication can be better addressed if the government starts from the bottom, from the 
local economies growing upward to the national economy. 
The rural banks play a major role in socio-economic development of the 
countryside, as more than eighty per cent (80%) of rural banks’ clients are within the 
poverty line. They keep the rural sectors at pace with current economic trends and 
developments, injecting dynamism to the rural areas through the motion of 
entrepreneurship, food production, livelihood projects, values formation, training and 
new forms of economic activities in the provinces. They mobilize small savings and 
provide farmers, fishermen, microentrepreneurs, employees, market vendors and other 
rural workers access to credit in order to give them opportunity to improve the quality of 
their life by engaging in productive activities. Furthermore, the rural banks are the best 
antidotes to the usurious practices of informal moneylenders who charge exorbitant 
interest rates to the hapless borrowers. 
The Rural Banks Act of 1992 or Republic Act No. 7353 was passed in recognition 
of the need to make credit available and accessible in the rural areas. It was a 
manifestation of government’s sensitivity to the plight of the rural folks who can barely 
gain access to the financial services offered by banking institutions because of their 
economic status. Among the incentives granted were the exemption of rural bank owners 
from the ownership ceiling, exemption from pubiication requirement of bank, 
foreclosures and exemption from the payment of gross receipts tax. These measures were 
meant to enhance the operation of the rural banks after the financial turbulence of the 
mid-80’s resulting fi-om misguided government financial policies at that time. 
Due to political and economic crises, rural banks have not recovered, remained in 
the state where they were in the 1980’s and the poverty in the countryside widened. Such 
a situation has a negative impact on key sections of our economy that needs immediate 
attention and our wavering support. 
This amendatory bill aims to resolve the issues, plug the loopholes, decrease 
financial cost of borrowers and re-direct the flow of knds to the countryside that diluted 
the real intent of R.A. 7353. Some of the important features of the bill are as follows: 
0 
0 
0 
That the compliance of the small credit allocation is full compliance of medium 
credit allocation as medium term borrowers rarely apply credit to rural banks, 
Incentive in the development of local economy to reach and decrease the cost of 
intermediation to the poor, 
Providing for collateral integrity on untitled lands, 


Increase of loan amount exempted from publication and registration fees passed 
on to the borrowers, 
Eliminate irritations on acquired lands in satisfaction of loans to decrease non- 
performing assets, 
Defer payment of capital gains tax upon consolidation until after sale to prevent 
double taxation, 
Loans granted by financial institutions to rural banks is compliance of Agri-Agra 
Law to propel fhds to the rural areas, 
Extension of exemption from taxes, except income tax, to ten (10) years to 
decrease financial cost of borrowers and level the playing field, 
Exemption of withholding tax on deposits to redirect hnds from urban to rural 
areas. 
In view of the foregoing, the immediate passage of this bql is earnestly sought. 


13fh CONGRESS OF THE REPUBLIC ) 
“0:: ,blJ 3fi 
,IL\ . * [ I  
OF THE PHILIPPINES 
) 
First Regular Session 
) 
H i 2 + M T E  
S.B. No. 
91 
Introduced by Senator Magsaysay, Jr. 
AN ACT 
TO LIBERALIZE THE OPERATIONS OF RURAL BANKS AMENDING FOR 
THAT PURPOSE REPUBLIC ACT NO. 7353, OTHERWISE KNOWN AS THE 
NEW RURAL BANKS ACT OF 1992 AND FOR OTHER PURPOSES. 
Be it enacted by the Senate and House of Representatives of the Philippines in 
Congress assembled: 
SECTION 1. Section 3 of Republic Act No. 7353 otherwise known as the “Rural 
Banks Act of 1992” is hereby amended to read as follows: 
“SECTION 3. In hrtherance of this policy, the Monetary Board of the 
[Central Bank of the Philippines] BANGKO SENTRAT, NG PILIPINAS shall formulate 
the necessary rules and regulations governing the establishment and operation of rural 
banks for the purpose of providing adequate credit facilities to farmers and merchants, or 
to cooperatives of such farmers and merchants and, in general, to the people of the rural 
communities, and to supervise the operation of such banks.” 
SECTION 2. Section 4 of the same Act is hereby amended to read as follows: 
“SECTION 4. No rural bank shall be operated without a Certificate of 
Authority from the Monetary Board of the [Central Bank] BANGKO SENTRAL NG 
PILIPINAS. Rural Banks shall be organized in the form of stock corporations. Upon 
consultation with the rural banks in the area, duly established cooperatives and 
corporations primarily organized to hold equities in rural banks may organize a rural 
bank and/or subscribe to the shares of stock of any rural bank: Provided, That a 
cooperative or corporation owning or controlling the whole or majority of the voting 
stock of the rural bank shall be subject to special examination and to such rules and 
regulations as the Monetary Board may prescribe. With the exception of shareholdings 
of corporations organized primarily to hold equities in rural banks as provided for under 
Section [12-C] 13 of Republic Act No. [337] 8791, as amended, and of Filipino- 
controlled domestic banks, the capital stock of any rural bank shall be filly 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: 
PROVIDED, THAT CITIZEN SHALL INCLUDE FILIPINOS WHO LOST 
THEIR CITICENSHIP BY THE ACQUISITION OF FOREIGN CITIZENSHIP 
AND THEIR DESCENDANTS UP TO 3m DEGREE OF CONSAGUINITY OR 
AFFINITY: Provided FURTHE& That any provisions of existing laws to the contrary 
notwithstanding, INDIVIDUAL stockholdings in a rural bank shall be UP TO 40% OF 
VOTING STOCK AS PROVIDED BY SECTION 11 OF REPUBLIC ACT NO. 
8791: [exempt from any ownership ceiling for a period of ten (10) years from the 
approval of this Act:] Provided, further, that any [such] exemption shall require the 
approval of the Monetary Board. If subscription of private shareholders to the capital 
stock of a rural bank cannot be secured or is not available, or insufficient to meet the 
normal credit needs of the locality, the Land Bank of the Philippines, the Development 
Bank of the Philippines, or any government-owned or controlled bank or financial 
institution, on representation of the said private shareholders but subject to the investment 
guidelines, policies and procedures of the bank or financial institution TO BE 
FORMULATED WITHIN SIX (6) MONTHS FROM THE APPROVAL OF THIS 


ACT and upon approval of the Monetary Board of the [Central Bank] BANGKO 
SENTML NG PILIPINAS, shall subscribe to the capital of such rural bank AT A 
PREFERABLE TERMS, which shall be paid in full at the time of subscription, in an 
amount equal to the fblly paid subscribed and unimpaired capital of the private 
stockholders or such amount as the Monetary Board may prescribe as may be necessary 
to promote and expand rural economic development: Provided, however, That such 
shares of stock subscribed by the Land Bank of the Philippines, The Development Bank 
of the Philippines or any government-owned or controlled bank or financial institution 
may be sold at any time at market value to private individuals who are citizens of the 
Philippines: Provided, finally, That in the sale of shares of stocks subscribed by the Land 
Bank of the Philippines, the Development Bank of the Philippines or any government- 
owned or controlled bank or financial institutions, the registered stockholders shall have 
the right of pre-emption within one (1) year from the date of offer in proportion to their 
respective holdings, but in the absence of such buyer, preference, however, shall be given 
to residents of the locality or province where the rural bank is located.” 
SECTION 3. Section 5 of the same Act is hereby amended to read as follows: 
“SECTIONS 5. All members of the Board of Directors of the rural Bank 
shall be citizens of the Philippines at the time of their assumption to office: Provided, 
however, That nothing in this Act shall be construed as prohibiting any appointive or 
elective public official from serving as director, officer, consultant or in any capacity in 
the bank; PROVIDED FURTHERMORE TECAT RURAL BANKS SEtALL BE 
EXEMPT FROM INDEPENDENT DIRECTORS AS PROVIDED BY SECTION 
15 OF REPUBLIC ACT NO. 8791. 
No director or officer of any rural bank shall, either directly or indirectly, for 
himself or as the representative or agent of another, borrow any of the deposits or fbnds 
of such banks, nor shall he become a guarantor, endorser, or surety for loans from such 
bank to others, or in any manner be an obligor for money borrowed from the bank or 
loaned by it except with the written approval of the majority of the directors of the bank, 
excluding the director concerned. Any such approval shall be entered upon the records of 
the corporation and a copy of such entry shall be transmitted forthwith to the appropriate 
supervising department. The director/officer of the bank who violates the provisions of 
this section shall be immediately dismissed from his office and shall be penalized in 
accordance with Section 26 of this Act. 
The Monetary Board may regulate the amount of credit accommodations that may 
be extended directly to the directors, officers or stockholders of rural banks of banking 
institutions. However, the outstanding credit accommodations which a rural bank may 
extend to each of its stockholders owning two percent (2%) or more of the subscribed 
capital stock, its directors, or officers shall be limited to an amount equivalent to the 
respective outstanding deposits and book value of the paid-in capital contributions in the 
bank.” 
SECTION 4. Section 6 of the same Act is hereby amended to read as follows: 
“ SECTION 6. Loans or advances extended by rural banks organized and 
operated under this Act shall be primarily for the purpose of meeting the normal credit 
needs of farmers, fishermen or farm families owning or cultivating land dedicated to 
agricultural production as well as the normal credit needs of cooperatives and 
[merchants] MICRO, SMALL AND MEDIUM ENTERPRISES. In the granting of 
loans, the rural bank shall give preference to the application of farmers and [merchants] 
ENTREPRENEURS whose cash requirements are small: 
PROVIDED, THAT 
RURAL BANKS WHICH HAVE EXTENDED EIGHT PERCENT (8%) OR 
MORE TO SMALL ENTERPRISES SHALL BE CONSIDERED AS FULL 
COMPLIANCE OF THESMALL AND MEDIUM CREDIT MANDATORY 
ALLOCATION AS PROVIDED IN RA. NO. 69’77 AS AMENDED BY R.A. 8289. 


AS POVERTY RESIDES IN THE COUNTRYSIDE, RURAL BANKS SHALL 
ACTIVELY PARTICIPATE IN THE DEVELOPMENT OF LOCAL ECONOMY 
THRU MICROFINANCE, LIVELIHOOD PROJECTS, VALUES FORMATION, 
TRAINING AND EDUCATION: PROVIDED THAT RURAL BANKS WITH AT 
LEAST TWENTY PERCENT (20%) MICROFINANCE LOAN PORTFOLIO 
SFIALL BE ALLOWED TO OPEN BRANCH OR EXTENSION OFFICES: 
PROVIDED FURTHER THAT TO REDUCE THE COST OF LOANS AND 
DEPOSITS 
OF 
MARGINALIZED 
CLIENTS, 
ALL 
MICROFINANCE 
TRANSACTIONS SHALL BE EXEMPT FROM AL TAXES, FEES AND 
CHARGES OF WHATEVER NATURE. 
Loans may be granted by rural banks on the security of lands without Torrens Title where 
the owner of private property can show five (5) years or more of peaceful, continuous and 
uninterrupted possession in concept of owner; or of portions of fi-iar land estates or other 
lands administered by the Bureau of Lands that are covered by sales contracts and the 
purchasers have paid at least five (5) years installment thereon, without the necessity of 
prior approval and consent by the Director of Lands; or of portions of other estates under 
the administration of the Department of Agrarian Reform or other governmental agency 
which are likewise covered by sales contracts and the purchasers have paid at least five 
(5) years installment thereon, without the necessity of prior approval and consent of the 
Department of Agrarian Reform or corresponding governmental agency; or of homestead 
or free patent lands pending the issuance of titles but already approved, the provisions of 
any law or regulations to the contrary notwithstanding: Provided, That when the 
corresponding titles are issued, the same shall be delivered to the Register of Deeds of the 
province where such lands are situated for the annotation of the encumbrance: Provided, 
further, That in the case of lands pending homestead or free patent titles, copies of notices 
for the presentation of the final proof shall also be firnished the creditor rural bank and, 
if the borrower applicants fail to present the final proof within thirty (30) days from the 
date of notice, the creditor rural bank may do so for them at their expense: Provided, 
furthermore, 
That the applicant for homestead or free patent has already made 
improvements on the land and the land applied for is to be used for firther development 
of the same or for other productive economic activities: 
Provided, [finally] 
FURTHERMORE, That the appraisal and verification of the status of a land is a fill 
responsibility of the rural bank and any loan granted on any land which shall be found 
later to be within the forest zone shall be for the sole account of the rural bank: 
PROVIDED FINALLY, THAT SAID LANDS NOT COVERED BY TORRENS 
TITLE BUT COVERED BY TAX DECLARATIONS, HOMESTEAD OR FREE 
PATENT OR EMANCIPATION PATENT TITLTES AND OTHER LAND 
TITLES SHALL BE ACCEPTED AS REAL ESTATE COLLATERAL BY 
BANGKO SENTRAL NG PILIPINAS, LAND BANK OF THE PHILIPPINES, 
DEVELOPMENT BANK OF TEIE PHILIPPINES AND OTHER GOVERNMENT 
OWNED OR CONTROLLED FINANCIAL INSTITUTION FOR LOANS 
GRANTED TO RURAL BANKS. 
The foreclosure of mortgages covering loans granted by rural banks and executions of 
judgment thereon involving real properties levied upon by a sheriff shall be exempt from 
the publications in newspapers now required by law where the total amount of loan, 
excluding interest AND OTHER CHARGES due and unpaid, does not exceed [one 
hundred thousand pesos (P l00,OOO)l ONE MILLION PESOS (Pl,OOO,OOO) or such 
amount as the Monetary Board may prescribe as may be warranted by prevailing 
economic conditions. It shall be sufficient publication in such cases if the notices of 
foreclosure and execution of judgment are posted in the most conspicuous area of the 
municipal building, the municipal market, the rural bank, the barangay hall, and the 
barangay public market, if any, where the land mortgaged is situated during the period of 
sixty (60) ,days immediately preceding the public auction or 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: Provided, That when a homestead or free patent is 
foreclosed, the homesteader or free patent holder, as well as his heirs shall have the right 
to redeem the same within one (1) year fkom the date of foreclosure in the case of land 


not covered by a Torrens Title or one (1) year from the date of the registration of the 
foreclosure in the case of land covered by a Torrens title: Provided, finally, That in any 
case, borrowers, especially those who are mere tenants, need only to secure their loans 
with the produce corresponding to their share. 
A rural bank shall be allowed to foreclose lands mortgaged to it PROVIDED THAT 
AGRICULTURAL LANDS ACQUIRED THROUGH FORECLOSURE OF 
MORTGAGE OR DACION EN PAGO OR OTHER MEANS OF ACQUISITION 
IN SATISFACTION OF LOANS, CAN BE SOLD DIRECTLY TO ANY 
INTERESTED BUYER REGARDLESS OF AREA; PROVIDED FURTHER, 
THAT RURAL BANKS SHALL BE EXEMPTED FROM TENANCY CLAIMS 
ARISING FROM SUCH LOANS GRANTED ON THE SECURITY OF 
AGRICULTURE LANS WHEN 
SUCH AGRICULTURAL LANDS ARE 
CERTIFIED TO AS UNTENANTED AT THE TIME TBE LOANS IS 
GRANTED: 
PROVIDED 
FURTHERMORE, 
THAT 
MORTGAGE 
AND 
FORECLOSURE OF FAMILY HOME CAN BE EFFECTED BY WRITTEN 
CONSENT OF HUSBAND AND WIFE: Provided FURTHERMORE, That said 
lands shall be covered under Republic Act No. 6657. 
PROVIDED FINALLY, THAT PAYMENT OF CAPITAL GAINST TAX AND 
OTHER TAXES OF WHATEVER NATURE ON FORECLOSED LANDS OR 
LAND AQUIRED THRU DACTON EN PAGO OR LANDS ACQUIRED IN 
SATISFACTION OF LOANS GRANTED BY RURAK BANKS, SHALL BE 
DEFERRED UNTIL SOLD BY THE RURAL BANK TO ANY INTERESTED 
BUYERS WITHIN FIVE (5) WEARS FROM DATE OF CONSOLIDATION OF 
OWNERSHIP AS PROVIDED’BY SECTION 52 OF REPUBLIC ACT NO. 8791.” 
Section 5. 
Section 8 of the same Act is hereby amended to read as follows: 
“SECTION 8. To provide supplemental capital to any rural bank until it has 
accumulated enough capital of its own or stimulate private investments in rural banks, the 
Land Bank of the Philippines, the Development Bank of the Philippines or any 
government-owned or-controlled bank or financial institution shall subscribe within thirty 
(30) days to the capital stock of any rural bank from time to time in an amount equal to 
the total equity investment of the private shareholders which shall be paid in full at the 
time of the subscription or such amount as may be necessary to promote and the Land 
Bank of the Philippines, the Development Bank of the Philippines or any government- 
owned or-controlled bank or financial institution, may, pursuant to this section, at any 
time, be paid off at par and retired in whole or in part if the rural bank has accumulated 
enough capital strength to permit retirement of such shares, or if an offer is received from 
private sources to replace the equity investment of the Land Bank of the Philippines, the 
Development Bank of the Philippines or any government-owned or-equity of such bank. 
In case of retirement of stock or replacement of equity investments of the Land Bank of 
the Philippines, the Development Bank of the Philippines or any government-owned or- 
controlled bank or financial institution, the registered private shareholders of the rural 
bank shall have the right of pre-emption within one (1) year from the date of offer in 
proportion to their respective holdings. 
Stocks held by the Land Bank of the Philippines, the Development Bank of the 
Philippines or by any government-owned or-controlled bank or financial institution, 
under the terms of this section, shall be made preferred only as to assets upon liquidation 
and without the power to vote and shall share in dividend distributions from the date of 
issuance in the amount of four percent (4%) on the first and second year, six (6%) on the 
third and fourth years, eight percent (8%) on the fifth and sixth years, ten percent (10%) 
on the seventh and eight years and twelve percent (12%) on the ninth to the fifteenth 
years without preference: Provided, However, That if such stock of the Land Bank of the 
Philippines, the Development Bank of the Philippines or any government-owned or- 
controlled bank or financial institution is sold to private shareholders, the same may be 
converted into common stock of the class provided for in Section 10 hereof Provided, 
further, That pending the amendment of the Articles of Incorporation of the rural bank, if 


necessary, for the purpose of reflecting the conversion into common stock of preferred 
stock to sold to private stockholders, the transfer shall be recorded by the rural bank in 
the stock and transfer book and such shareholders shall thereafier enjoy all the right and 
privileges of common stockholders. The preferred stocks so transferred shall be 
surrendered and cancelled and the corresponding common stocks shall be issued. 
The corporate secretary of the rural bank shall submit to the [Central Bank] BANGKO 
SENTRAL NG PILIPINAS and the Securities and Exchange Commission a report on 
every transfer of preferred stock to private shareholders, and such report received by the 
Securities and Exchange Commission shall form part of the corporate records of the rural 
bank. When all the preferred shares of stock of a rural bank have been sold to private 
shareholders, the Articles of Incorporation of the rural bank shall be amended to reflect 
the conversation of the preferred share of stock into common stock. For this purpose, the 
President, the corporate secretary, and a majority of the Board of Directors shall issue a 
certificate that all preferred shares have been sold to private shareholders which, together 
with a copy of the Articles of Incorporation, as amended, duly certified correct by the 
President, corporate secretary, and a majority of the Board of Directors, shall be filed 
with the Securities and Exchange Commission, which shall attach the same to the original 
Articles of Incorporation on file with said office. 
The Securities and Exchange Commission shall not register the amended Articles of 
Incorporation unless accompanied by the Certificate of Authority required under 
Section [9] 14 Republic Act No. [337] 8791, as amended. 
All supervised past due and restructured past due loans, including those covered under 
existing rehabilitation programs of the [Central Bank] BANGKO SENTRAL NG 
PILIPINAS, and fifty percent (50%) of non-supervised past due and restructured past 
due loans including accrued interest thereon of rural banks organized under Republic Act 
No. 720, as amended, as of December 3 1, 1986, shall be converted into preferred stocks 
of the rural bank and issued in favor of the Land Bank of the Philippines, the 
Development Bank of the Philippines or any government-owned or-controlled bank or 
financial institution: Provided, further, That the equivalent penalties due from 
corresponding farmers are likewise waived: Provided, further, That rural banks that 
prefer to settle their arrearages under plan of payment or a combination of both plan of 
payment and conversion may do so in accordance with existing regulations and 
provisions of this Act: Provided, furthermore, That rural banks shall match these 
preferred stocks with private equity in equal annual installments over a period of fifteen 
(15) years to begin three (3) years afler conversion: Provided, finally, That the[Central 
Bank] BANGKO SENTRAK NG PILIPINAS, the Land Bank of the Philippines, the 
Development Bank of the Philippines and any government-owned or-controlled bank or 
financial institution shall continue to rediscount subject to their respective programs, 
policies and guidelines against papers evidencing a loan granted by a rural bank in order 
to achieve the declared policy and promote the objectives of this Act.” 
SECTION 6. Section 11 of the same Act is hereby amended to read as follows: 
“SECTION. 11. The power to supervise the operation of any rural bank by the 
Monetary Board as herein indicated shall consist in placing limits to the maximum credit 
allowed to any individual borrower; in prescribing the interest rate; in determining the 
loan period and loan procedures; in indicating the manner in which technical assistance 
shall be extended to rural banks; in imposing a uniform accounting system and manner of 
keeping the accounts and records of rural banks; in instituting periodic surveys of loan 
and lending procedures, audits, test-check of cash and other transactions of the rural 
banks; in conducting training courses for personnel of rural banks; and, in general, in 
supervising the business operations of the rural banks. 
The [Central Bank] BANGKO SENTRAL NG PILLPINAS shall have the power to 
enforce the laws, orders, instructions, rules and regulations promulgated by the Monetary 
Board applicable to rural banks; to require rural banks, their directors, officers and agents 
to conduct and manage the affairs of the rural banks in a lawful and orderly manner; and, 


upon proof that the rural bank or its Board of Directors, or officers are conducting and 
managing the affairs of the bank in manner contrary to laws, orders, instructions, rules 
and regulations promulgated by the Monetary Board or in a manner substantially 
prejudicial to the interest of the Goverqent, depositors or creditors, to take over the 
management of such bank when specifically authorized to do so by the Monetary Board 
after due [hearing] process until a new board of directors, and officers are elected and 
qualified without prejudice to the prosecution of the persons responsible for such 
violations under the provisions of Section 32, 33 and 34 of Republic Act. No. 265, as 
amended. 
The management of the rural bank by the [Central Bank] BANGKO SENTRAL NG 
PIXIPINAS shall be without expenses to the rural bank, except such as is actually 
necessary for its operation, pending the election and qualification of a new board of 
directors and officers to take of those responsible for the violations or acts contrary to the 
interest of the Government, depositors or creditors. 
The director and the examiners of the department of the [Central Bank] BANGKO 
SENTRAL NG PILIPINAS charged with the supervision of rural banks are hereby 
authorized to administer oaths to any director, officer or employee of any rural bank or to 
any voluntary witness and to compel the presentation of all books, documents, papers or 
records necessary in his or their judgement to ascertain the facts relatives to the true 
condition of any rural bank or to any loan.” 
SECTION 7. Section 12 of the same Act is hereby amended to read as follows: 
“SECTION. 12. In addition to the operations specifically authorized in this Act, 
any rural bank may: 
Accept savings and time deposits; 
Open current or checking accounts, provided the rural bank has assets of at least Five 
million pesos (P5,000,000) subject to such guidelines as may be established by the 
Monetary Board; 
Act as correspondent for other financial institutions; 
Act as a collection agent; 
Act as official depositary of municipal, city or provincial hnds in the municipality, city 
or province where it is located, subject to such guidelines as may be established by the 
Monetary Board; 
Rediscount paper with the Philippine National Bank, the Land Bank of the Philippines, 
the Development Bank of the Philippines, or any other banking institution, including its 
branches and agencies. Said institution shall specifl the nature of paper deemed 
acceptable for rediscount, as well as the rediscount rate to be charged by any of these 
institutions; PROVIDED THAT SUCH LOANS EXTENDED TO THE RURAL 
BANKS ARE SUFFICIENT COMPLIANCE OF AGRI-AGRA LAW; 
Offer other banking services as provided in Section [72] 53 of Republic Act No. 
[337] 8791, as amended; and 
Extend financial assistance to private and public employees in accordance with the 
provisions of Section 5 of republic Act No. 3779, as amended. 
(I) PURCHASE, HOLD AND CONVEY REAL ESTATE AS PROVIDED IN 
SECTION 52 OF REPUBLIC ACT NO 8791. 


With written permission of the Monetary Board of the [Central Bank] BANGKO 
SENTRAL NG PILIPINAS, any rural bank may act as trustee over estates or properties 
of farmers and merchants. 
Nothing in this section shall be construed as precluding a rural bank from performing, 
with prior approval of the Monetary Board, all the services authorized for savings and 
mortgage banks, or for commercial banks, under Republic Act No. [337] 8791, as 
amended, or from operating under an expanded banking authority as provided in [Section 
2143 ofl the same Act.” 
SECTION 8. Section 15 of the same Act is hereby amended to read as follows: 
“SECTION. 15. TO REDUCE COST OF LOANS TO BORROWERS AND 
PROMOTE FINANCIAL DEEPING IN THE COUNTRYSIDE, all rural banks 
created and organized under the provisions of this Act shall be exempt from the payment 
of all DIRECT AND INDIRECT taxes, fees and charges of whatever nature and 
description, except the corporate income tax and local taxes, fees and charges, for a 
period of [five (5)] TEN (10) years from the date of commencement of operations, 
EXCEPT RURAL BANKS HEREINAFTER BECOME A SUBSIDIARY OR 
AFFILIATES OF OTHER TYPES OF BANKING INSTITUTION OTHER THAN 
APEX BANK OR HOLDING CORPORATION OF RURAL BANKS. 
REDUCE COST OF1 LOANS TO BORROWERS AND PROMOTE 
FINANCIAL DEPENING I N  THE COUNTRYSIDE, all rural banks in operation as of 
the date of approval of this Act ‘shall be exempt from the payment of all DIRECT AND 
INDIRECT taxes, fees and charges of whatever nature and description, except the years 
from the approval of this Act, EXCEPT RURAL BANKS HEREINAFTER BECOME 
A SUBSIDIARY OR AFFILIATE OF OTHER BANKING INSTITUTION OR 
CORPORATION OTHER THAN APEX BANK OR HOLDING CORPORATION 
OF RURAL BANKS. 
IN ORDER TO PROMOTE RURAL SAVINGS, INTEREST EARNINGS 
ON DEPOSITS WITH RURAL BANKS SHALL BE EXEMPT FROM 
WITHHOLDING TAX.” 
SECTION 9. Section 16 of the same Act is hereby amended to read as follows: