The House of Representatives recently passed on third and final reading a bill allowing the entry of foreign equity into the rural banking system to revitalize the industry and improve access to banking services for the rural areas of the country, a press release from Congress said.
House Bill 5360 seeks to amends Section 4 of Republic Act 7353 or the Rural Banks Act of 1992 to open new source of equity infusion for rural banks, allowing non-Filipino citizens to participate and become members of the Board of Directors. Under it, non-Filipino citizens may purchase, acquire and own up to 40 percent of the authorized capital stock of rural banks, the press release said.
Rep. Sergio Apostol (2nd District, Leyte) said that the government encourages and assists in the establishment of a rural banking system designed to make needed credit available and readily accessible in the rural areas on reasonable terms.
Rep. Pedro Romualdo (Lone District, Camiguin), author of the bill, said the entry of foreign investment in the rural banking sector shall pave the way for a sustained competitive and robust banking system.
"The rural bank industry plays a pivotal role in meeting and sustaining the needs of various sectors of the local economy such as the business sector, agriculture and fisheries sector, micro-enterprises and small," Romualdo said.
Under the measure, foreign holdings shall not be increased but may be reduced, and once reduced shall not be increased beyond 40 percent of the authorized capital stock of rural banks, the press release said.
The Bangko Sentral ng Pilipinas shall prescribe the necessary rules and regulations on the amendments of the Rural Bank Act in consultation of various stakeholders and disseminate the entry of foreign equity into the rural banking system, it added.*