General Banking Act-PDIC

8/6/2019 General Banking Act-PDIC

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Banking Laws


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` Definition and Classification ofBanks

` Nature ofBanking Business

Debtor-Creditor Relationship

Fiduciary Duty

Impressed with Public Interest

Diligence Required ofBanks

Cases Assigned

` Nature ofBank Funds and Bank Deposits


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`Grant of Loans and Security

Requirements:

Ratio ofnet worth to total risk assets Single Borrowers Limit

Restrictions on Bank Exposure to DOSRI


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` The Monetary Board will prescribe the minimum

ratio which the net worth ofa bank must bear to its

total risk assets.

` Ifthere is non-compliance, MB may: Limit or prohibit distribution of net profits and require the

same to be used to increase capital accounts until the

minimum ratio is achieved.

Restrict or prohibit acquisition of major assets and new

investments until minimum required capital ratio isachieved.


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` Total amount of loans, credit accommodations and

guarantees that may be extended to any person,

partnership, association, corporation or other

entity shall at no time exceed 25% of the net worthofa bank.

` Exceptions: MB otherwise prescribe for reasons ofnational interest.

Deposits of rural banks with government-owned otcontrolled financial institutions.


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` Total amount may be increased by an additional

10% provided the additional liabilities of any

borrower is adequately secured.

` Exception Otherwise provided by the MB.


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` No director or officer of any bank shall directly or

indirectly, for himself or as the representative or

agent of others, borrow from such bank nor shall

he become a guarantor, indorser or surety forloans form such bank or others or in any manner

be an obligor or incur any contractual liability to

the bank except with the written approval of the

majority of all directors of the bank, excluding thedirector concerned.


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Banking Laws


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` Basic Policy: Promote and safeguard the interestof the depositing public by way of providingpermanent and continuing insurance coverage onall insured deposits.

` Deposit: any unpaid balance of money or itsequivalent received by the bank in the usualcourse of business and for which it has given or itsobliged to give credit to a commercial, checking,

savings, time or thrift account, or which isevidenced by a passbook check and /or certificateofdeposit.


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` Statutory Liability. PDIC is governed primarily bythe provisions of the law creating it. Hence, liabilityis statutory and rests upon the existence ofdeposits with the insured bank.

` Case: PDIC vs. CA, December 22, 1997.

` Payment. Whenever a bank is closed by the MB,PDIC shall pay insured deposits: By cash or

By making available to each depositor a transferreddeposit in another insured bank in an amount equal toinsured deposit ofsuch depositor.


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` Insured Deposit means the amount due to any

depositor for deposits in an insured bank net of

any obligation of the depositor to the insured bank

as of the date of closure, but not to exceedP500,000.00.

` In determining such amount, all deposits in the

bank maintained in the same right and capacity for

the benefit of the depositoreither in his own nameor in the name ofothers shall be added together.


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` Joint Account regardless of whether the

conjunction used is and, or, and/or, shall be

insured separately from any individually-owned

deposit account.` Accounts held jointly by two or more natural

persons or two or more juridical persons or

entities, the maximum insured deposit shall be

divided into as many equal shares are there arepersons unless a different sharing is stipulated.


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` If account is held by a juridical person jointly

with one or more natural person, the maximum

insured deposit shall be presumed to belong

entirely to the juridical person.` The aggregate of the interest of each co-owner

over several joint accounts, whether owned by the

same or different combinations of individuals,

juridical persons or entities, shall likewise besubject to the maximum insured deposit of Five

Hundred Thousand Pesos (P500,000.00).


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` No owner/holder of any negotiable certificate of depositshall be recognized as a depositor unless his name isregistered as owner/holder thereof in the books of theissuing bank.

` That, in case of a condition that threatens the monetary

and financial stability of the banking system as determinedby the Monetary Board, the maximum deposit insurancecover may be adjusted in such amount, for such a period,and/orfor such deposit products, as may be determined bya unanimous vote of the Board of Directors in a meetingcalled for the purpose and chaired by the Secretary of

Finance, subject to the approval of the President of thePhilippines.


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` Prescription. 2 years from actual takeover of the closed bank bythe receiver orfailure to enforce claim within 2 years after the 2year period to file a claim unless otherwise waived by PDIC

` Notice. To creditors by whatever means the BOD deemedappropriate.

`

Publication. Notice is published once a week for 3 consecutiveweeks in a newspaper of general circulation or a newspapercirculated where the closed bank are located ifappropriate.

` Delay. Failure to settle claim within 6 months from date of filingof claim. Responsible director, officers of employees of PDICshall upon conviction be imprisoned from 6 months to 1 year.Exception: Validity of claim requires resolution of issues orfactsby another agency.


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` Effect of Payment by PDIC. Subrogation of rights ofthe depositor against the closed bank to the extent ofsuch payment.

` TRO and Injunction. No other court except CA may

issue against PDIC` SC may issue restraining order or injunction when the

matter is of extreme urgency involving a constitutionalissue. Provided, the party applying shall furnish abond in an amount fixed by the court in favor of PDIC

if the court should finally decide that the applicant wasnot entitled to reliefsought.

Documents

General Banking Act-PDIC