RURAL &

COOPERATIVE
BANK

Christian Valencia
Klara Jucaban
RURAL
BANK
HISTORICAL
HISTORICAL BACKGROUND
BACKGROUND
The Philippine rural banking system was established
through the Rural Banking Act of 1952 

It was later amended by the Rural Banking Act of 1992.

WHAT
WHAT IS
IS AA RURAL
RURAL BANK?
BANK?
These are government assisted/supported banks which are privately owned and
managed

It is a type of bank which conducts credit transactions in rural areas where

commercial banks are relatively far and insufficient
 WHAT
WHAT IS
IS ITS
ITS PURPOSE?
PURPOSE?
● Rural banks in the Philippines were primarily established to
promote and expand the rural economy.

● In view of the importance of rural banking in rural and agricultural

development, the central government bank granted incentives to
organizers of rural banks.
HOW
HOW DOES
DOES IT
IT OPERATE?
OPERATE?
Rural banks shall be organized in the form of stock corporations with no
less than five nor more than fifteen incorporators.
 WHAT ARE THE REQUIREMENTS FOR
ESTABLISHING RURAL BANK IN THE
PHILIPPINES
Banks to be established shall comply with the required minimum capital enumerated below
or as may be prescribed by the Monetary Board:

Type of Bank Revised Amounts (In Million Pesos)

d. Rural Banks - within Metro Manila P 26.0
- cities of Cebu and Davao P 13.0
- in 1st, 2nd & 3rd class cities and 1st class municipalities P 6.5
- In 4th, 5th & 6th class cities and in 2nd, 3rd & 4th class municipalities P 3.9
- In 5th & 6th class municipalities P 2.6
 FUNCTIONS
FUNCTIONS OF
OF RURAL
RURAL BANKS
BANKS

Grant loans and make Make collections and

Receive in custody funds, payments for the
investments in account of others and
documents, and other
accordance with Sell perform such other
valuable objects, and rent
existing rules and domestic services for its
safety deposit boxes for customers as are not
drafts. Act as financial agent,
regulations. the safeguarding of such incompatible with
buy and sell, by order
objects. banking business.
of and for the account
Act as of its customers,
correspondent shares, evidences of
Accept savings for other indebtedness and all
and time financial types of securities.
deposits. institutions.
WHAT
WHAT ARE
ARE THE
THE SERVICES
SERVICES OFFERED
OFFERED BY
BY
RURAL
RURAL BANKS?
BANKS?
The rural bank, upon prior approval of the Monetary Board, performs any or all of the following services:

1. Open current, demand or checking accounts or New accounts

2. Act as trustee over estates or properties of farmers and merchants.
3. Acts as official depository of municipal, city or provincial funds in the municipality, city or province
where the bank is located.
4. Rediscount paper with the Philippine National Bank or the Development Bank of the Philippines, or
other banks and their branches and agencies, subject to such rules and regulations governing
rediscounting.
5.Invest in allied undertakings.
PERFORMANCE
PERFORMANCE OF
OF RURAL
RURAL BANKS:
BANKS:
https://www.bsp.gov.ph/Statistics/Selected%20Performance%20Indicators/57.aspx
RURAL
RURAL BANKS
BANKS IN
IN THE
THE
PHILIPPINES
PHILIPPINES
According to the Bangko Sentral ng Pilipinas
(BSP), there were 514 rural banks as of January
2015, along with 30 similarly small cooperative
banks and 69 savings banks, which are larger
on average but include many small banks
serving remote areas.

This is down from 778 rural banks, 51

cooperatives and 117 savings banks in March
1999.
EXAMPLES
EXAMPLES OF
OF RURAL
RURAL BANKS
BANKS IN
IN THE
THE
PHILIPPINES
PHILIPPINES
RANKING
RANKING OF
OF RURAL
RURAL BANKS
BANKS IN
IN THE
THE
PHILIPPINES
PHILIPPINES (IN
(IN TERMS
TERMS OF
OF ASSETS)
ASSETS)
COOPERATIVE
BANKS
What
What is
is aa cooperative
cooperative &
& when
when was
was this
this
first
first used
used in
in commerce?
commerce?
A cooperative is a group of people with the
same needs. This was first seen in 1844 when a
group of 28 men composed of weavers and
workers from other trades created business
principles to establish their own shop in which
to sell their goods.
What
What is
is aa cooperative
cooperative bank?
bank?
It is similar to rural bank in terms of its purpose. The biggest difference
would be in terms of ownership. Rural banks are owned by private
individuals, but cooperative banks are owned by members of the
cooperative.
Characteristics
Characteristics of
of aa cooperative
cooperative bank
bank
● As a general rule, only one cooperative bank per province is allowed.
Although this largely depends on a province’s population.
● Members of the cooperative elect their board of directors to manage their
operation. ALthough bigger decisions are left with the central office to decide
upon.
● Their primary customers are members of the cooperative
 Functions
Functions of
of aa cooperative
cooperative bank
bank
(1) Provide financial services (2) Expand economies of rural communities
> Cooperative banks offer basic > Cooperative banks have an “one for all, all for
financial services such as loans and one” mission wherein their community gets
savings to rural communities together and help them grow, and in return, they
especially to farmers, merchants and make banking services available to rural
fishermen, communities.

> They prioritize loans for small business owners.

Requirements
Requirements for
for establishing
establishing cooperative
cooperative
banks
banks
● For cooperative banks, they must first register with the cooperative
development authority and be licensed by the Banko Sentral ng
Pilipinas as a cooperative bank.
● There is also a minimum capital heading depending on the location of
the bank which ranges from Php 10,000,000 to P50,000,000 in ordeer to
establish a head office.
● If one is interested in opening 10 branches, it ranges from P15,000,000
to P75,000,000
Cooperative
Cooperative banks
banks in
in the
the Ph
Ph
According to the Cooperative Development Authority, there is 18,065 cooperatives
which operates within the Philippines
Thank
you!