New law allows infusion of foreign equity in rural banks' capital

President Benigno Aquino III has signed a law allowing the infusion of foreign equity in the capital of rural banks.

Under Republic Act (R.A.) 10574, signed by the president last May 24, non-Filipino citizens may now own, acquire or purchase up to 60 percent of the voting stocks in a rural bank.

The new law amends Republic Act 7353, or the Rural Bank of 1992, which previously did not have any provision on foreign equity.

The new legislation also allows foreigners to become members of the board of directors of a rural bank, provided that their participation in the board shall be limited to their proportionate share in the equity of the rural bank.

At a press briefing, deputy presidential spokesperson Abigail Valte said R.A. 10574 "opens up another area for foreign capital" in the country and stands to benefit Philippine rural banks.

"I am told that the Bangko Sentral ng Pilipinas supports the passage of the bill because it supports the ongoing program for them to strengthen rural banks," Valte said. — Andreo Calonzo/KBK, GMA News