A. General Banking Principles (RA 8791)

General Banking Principles under the General Banking Law of 2000

Republic Act No. 8791 is officially cited as "The General Banking Law of 2000"¹. Under this law, the Bangko Sentral provides policy direction in the areas of money, banking, and credit². To implement this mandate, the Monetary Board is authorized to prescribe ratios, ceilings, limitations, or other regulatory measures on the accounts and practices of banks and quasi-banks, conforming to internationally accepted standards, including those of the Bank for International Settlements (BIS), to the extent feasible². The Monetary Board may also grant exemptions from these ratios, ceilings, and limitations, such as in exceptional cases or to permit a bank or quasi-bank undergoing rehabilitation, merger, or consolidation to continue operations safely with respect to its depositors, creditors, and the public².

In addition to the general powers incident to corporations, a commercial bank possesses all powers necessary to carry on the business of commercial banking, subject to rules promulgated by the Monetary Board³. These powers encompass:

• Accepting drafts and issuing letters of credit³;
• Discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt³;
• Accepting or creating demand deposits, as well as receiving other types of deposits and deposit substitutes³;
• Buying and selling foreign exchange and gold or silver bullion³;
• Acquiring marketable bonds and other debt securities, subject to Monetary Board regulations on eligible securities, maturities, and aggregate amounts³; and
• Extending credit³.