Regulating co-operative banks eyed by Congress

By Jovee Marie N. dela Cruz @joveemarie

ABILL that will regulate the a ctivities of co-operative banks is now awaiting Senate deliberations and approval.

This was after members of the House of Representatives—voting 206 affirmative and 0 negative— approved on third and final reading House Bill (HB) 8265 to promote thrift and savings mobilization for sustainable economic development among co-operatives and their members.

The chamber approved HB 8265 to expand the membership of co-op banks to foreign co-ops, provided that such foreign co-ops may not own more than 40 percent of the total outstanding voting shares of a local co-op bank.

The proposed law provides that at least 15 co-op organizations duly established and registered under the Cooperative Code may register a co-op bank with the Cooperative Development Authority (CDA), upon compliance with the requirements of and required authorization from the Bangko Sentral ng Pilipinas (BSP).

This bill provides for the establishment, management and regulation of co-op banks under the supervision of the BSP as primary regulator, conformably with the provisions of the General Banking Law of 2000.

The BSP defines a co-op bank as “one organized for the primary purpose of providing a wide range of financial services to cooperatives and their members.”

It shall be organized only by coop organizations that are duly established and registered under the Philippine Cooperative Code of 2008, or Republic Act (RA) 9520, reads Ap- pendix 34 of the BSP’s Manual of Regulations for Banks.

HB 8265 also gives the CDA the task of monitoring co-op banks compliance with co-op laws, rules and regulations.

“We hope that with this proposed law, we will encourage more Filipinos to join co-operatives and form co-op banks so that credit facilities with reliable and reasonable terms will be more available and readily accessible to the public,” Speaker Ferdinand Martin G. Romualdez said.

“The long-term goal of this relevant law is to help co-operatives and Filipinos attain financial independence and achieve their aspirations,” Romualdez added.

HB 8265 also authorizes co-op banks to engage in a wide range of financial services such as extending loans, deposit taking, discounting and rediscounting, correspondent banking, dealing in debt securities, acting as collection agents, dealing in foreign exchange transactions, acting as government depository and conduit banks for government lending programs, and participating in government allocation programs geared towards the promotion of financial inclusion.

The bill also prescribes limitations on the lending authority of a co-op bank by imposing on private borrowings a ceiling of 25 percent of its unimpaired capital and surplus and grant incentives and privileges to registered co-op banks, including exemption from all national and local taxes, fees and charges provided under RA 9520 and related laws, subject to certain conditions, exemption from publication requirements on foreclosed lands and exemption from maximum land holding limits under existing agrarian laws.