On May 24, 2013 President Aquino signed into law Republic Act No. 10574. RA 10574 opens Philippine rural banks up to 60 percent foreign ownership. The law states that, “Non-Filipino citizens may own, acquire or purchase up to sixty percent (60%) of the voting stocks in a rural bank. The percentage of foreign-owned voting stocks shall be determined by the citizenship of the individual or corporate stockholders of the rural bank.” In allowing the assistance of foreign investments in Philippine rural banks, said banks are put in a better financial position to serve its clients through upgraded banking services. The Republic Act No. 10574 – which amends “The Rural Bank Act of 1992” (Republic Act No. 7353) – provides rural banks with the financial capacity to better service its clients in the Philippine countryside, i.e. farmers, fishermen, etc. Subsequently, with this law rural banks now have a better chance of acquiring more resources and funds for expansion and making their financial services more accessible to its clients.
When it comes down to the bottom line, in order to have a successful business – be it a bank, a restaurant, or a retail shop – having a sufficient capital is indeed extremely vital. In essence, that is what a bank is, a business. They provide a service, and in return are given payments for the service that they have provided. In order for a bank – regardless of how big or small – to make money, it needs to have money to begin with. This is because banks mostly make money when clients take out loans from them. Subsequently, when they receive payments for said loans interest is added to the sum. Now, with the help of foreign investments rural banks will have more cash to loan out to its clients hence receive more cash in return.
Rural banks are normally run by families who have grouped their money together to
