IV. Banking Law

Banking Law: BSP Supervision, Cooperative Banks, Economic Zones, and Penalties

Cooperative banks registered under the Cooperative Code are placed under the supervision of the Bangko Sentral ng Pilipinas (BSP), which formulates guidelines on their operations and governance in consultation with the Cooperative Development Authority and the concerned cooperative sector while recognizing their unique nature¹. Duly established cooperative organizations may organize a cooperative bank to provide financial and banking services to members, subject to BSP requirements and authorization, with the general rule that only one cooperative bank may be established per province unless local economic conditions warrant an additional entity¹. In special economic zones, existing banking laws and BSP rules and regulations similarly apply to banks, financial institutions, and ECOZONE-registered enterprises, encompassing rules on foreign exchange, current account transactions, local and foreign borrowings, foreign investments, and the establishment and operation of local banks, foreign banks, foreign currency deposit units, and offshore banking units².

Willful violations of the New Central Bank Act, other banking laws enforced by the BSP, or any order, instruction, rule, or regulation issued by the Monetary Board by any person, bank, quasi-bank, or entity subject to BSP supervision carry statutory penal liability³. The responsible persons are subject to a fine ranging from Fifty thousand pesos (₱50,000) to Two million pesos (₱2,000,000), imprisonment of two (2) to ten (10) years, or both, at the discretion of the court³. Furthermore, when a supervised entity persists in carrying on its business in an unlawful or unsafe manner, the Monetary Board may take action under Section 30 of the Act without prejudice to criminal penalties and administrative sanctions³. The BSP is also authorized to grant an informer's reward to qualified individuals voluntarily giving definite information, excluding officers or employees of the BSP, law enforcement, or intelligence agencies, as well as their relatives within the fourth degree of consanguinity or affinity³.