GENERAL BANKING LAWS

RA 8791
 Basic Rules and Restrictions:
A bank shall grant loans and other credit
accommodations only in amounts and for
the periods of time essential for the
effective completion of the operations to be
financed, consistent with safe and sound
banking practices. The bank must
ascertain before granting the load or other
credit accommodation the ability of the
debtor to fulfill his commitment.
 Single Borrower’s Limit (SBL):
 Except as the Monetary Board may otherwise prescribe for
reasons of national interest, the total amount of loans, credit
accommodations and guarantees as may be defined by the
MB that may be extended by a bank to any person,
partnership, association, corporation or other entity shall at no
time exceed 25% of the net worth of such bank. The basis for
determining compliance with SBL is the total credit
commitment of the bank to the borrower.
 GBL provides that, unless the MB prescribes otherwise, the
total amount of loans, credit accommodations and guarantees
prescribed in the preceding paragraph may be increased by
an additional 10% of the net worth of such bank provided the
additional liabilities of any borrower are adequately secured by
trust receipts, shipping documents, warehouse receipts or
other similar documents transferring or securing title covering
readily marketable, non-perishable goods which must be fully
covered by insurance
 Directors, Officers, Stockholders and Related
Interests loans.
• Under Section 26 New Central Bank Act RA 7653

Section 26. Bank Deposits and Investments. - Any director, officer or

stockholder who, together with his related interest, contracts a loan
or any form of financial accommodation from: (1) his bank; or (2)
from a bank (a) which is a subsidiary of a bank holding company of
which both his bank and the lending bank are subsidiaries or (b) in
which a controlling proportion of the shares is owned by the same
interest that owns a controlling proportion of the shares of his bank,
in excess of five percent (5%) of the capital and surplus of the bank,
or in the maximum amount permitted by law, whichever is lower,
shall be required by the lending bank to waive the secrecy of his
deposits of whatever nature in all banks in the Philippines. Any
information obtained from an examination of his deposits shall be
held strictly confidential and may be used by the examiners only in
connection with their supervisory and examination responsibility or
by the Bangko Sentral in an appropriate legal action it has initiated
involving the deposit account.
 Restrictions under General Banking Laws
• General Banking Law imposes restrictions (not total prohibition) on
borrowings and security arrangement by directors, officers, and
stockholders of the bank. These restrictions apply when the loan or
financial accommodation of DORSI is in excess of 5% of the capital and
surplus of the lending bank or in the maximum amount permitted by law,
whichever is lower.

• The GENERAL RULE is: a director or officer of any bank shall neither,
directly or indirectly, for himself or as the representative or agent of
others, borrow from such bank; nor become a guarantor, endorser or
surety for loans from such bank to others, or in any manner be an obligor
or incur any contractual liability to the bank. The EXCEPTION is when
there is a written approval of the majority of all the directors of the bank,
excluding the director concerned. The required approval shall be entered
upon the records of the bank and a copy of such entry shall be
transmitted forthwith to the appropriate supervising and examining
department of the BSP.
 Unless otherwise prescribed by the MB, loans and
other credit accommodations against “real estate”
shall not exceed 75% of the appraised value of the
respective real estate security, plus 60% of the
appraised value of the insured improvements, and
such loans may be made to the owner of the real
estate or to his assignees.
 Those against “security of chattels and
intangible properties” shall not exceed 75% of
the appraised value of the security, and such loans
and other credit accommodations may be made to
the title-holder of the chattels and intangible
properties or his assignees