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Rural Banking

In: Business and Management

Submitted By amorglinoga
Words 2336
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Rural Banking System

Republic Act No. 720, as amended, embodies the State’s policy “to promote and expand the rural economy in an orderly and effective manner by providing the people of the rural communities with the means of facilitating and improving their productive activities, and to encourage cooperatives.”

Toward this end, the Government shall encourage and assist in the esablishment of a system of rural banks which will place within easy reach and access of the people credit facilities on reasonbale terms.

Since the establishment of the first rural bank in 1952, the rural banking system has played a pivotal role in developing the country’s rural areas through the following:

1. The extension of credit facilities to small farmers, merchants and rural industry/enterprise operators.

2. The extension of technical assistance on small business or farm management, as well as the proper utilization of credit for production and marketing in coordination with supervisory and other involved government agencies.

3. The encouragement of savings and thrift consciousness among rural folk.

4. The encouragement of the establishment of farmers’ cooperatives.

Rural Bank, defined. A rural bank may be described simply as a bank located and established in a rural area for the purpose of placing within easy reach and access of the people credit facilities at reasonable terms.

Organization. No rural bank shall be operated without a Certificate of Authority of the Monetary Board of the Central Bank. Rural banks shall be organized in the form of stock corporations.

Capital Stock. One hundred per cent of the capital stock of any rural bank shall be owned and held directly or indirectly by citizens of the Philippines.

Board of Directors. As in the case of private development banks, all memebers of the board of…...

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