The Monetary Board (MB), the policy-making body of the Bangko Sentral ng Pilipinas (BSP), approved recently the increase in the minimum capital requirement for rural banks (RBs) and decided to simplify for the purpose of differentiated minimum capital, the grouping of cities and municipalities after extensive consultations with the affected stakeholders.
RBs are now required to meet the following minimum capital requirement, depending upon the location of their head office, as follows: Metro Manila, P= 100 million; Cities of Cebu and Davao, P= 50 million; all other cities, P= 25 million; first to fourth class municipalities, P= 10 million; and fifth to sixth class municipalities, P= 5 million.
The new minimum capital requirement shall apply only upon establishment of a new RB, or in the case of existing banks only (1) upon conversion of an existing RB to a higher category and vice versa, (2) upon relocation of the head office of an RB in areas of higher classification, (3) when majority of an RB’s total assets and/or majority of its total deposit liabilities are regularly accounted for by branches located in areas of higher classification or (4) when an RB applies for the grant of special banking authorities such as limited trust, foreign currency deposit unit (FCDU) operations and acceptance of demand deposits and NOW accounts.
The Monetary Board believes that the existing minimum capital requirement for RBs is no longer adequate to sustain a competitive and robust bank. The last time the required minimum capital was increased was in December 1999.