House approves amendments to the Cooperative Code
THE House of Representatives has approved on second reading a proposal to further amend Republic Act 9520, otherwise known as the Philippine Cooperative Code of 2008, to strengthen the loan portfolio of cooperative banks by allowing foreign investments thereby significantly improving its capacity to support economic endeavors in the countryside.
The approved measure, House Bill 6481, substituted House Bill 5989 authored by Reps. Jose Ping-ay and Cresente Paez (Party-list, COOP-NATCCO).
The bill’s plenary approval was endorsed by the House Committee on Cooperatives Development chaired by Rep. Ping-ay.
Ping-ay said the measure aims to enhance the financial capacity of cooperative banks in providing loans with reasonable terms supporting the economic growth of its partners in the local communities.
Ping-ay added that the bill will provide linkage as the government’s retailer of funds in order to enhance the viability of cooperatives as an economic enterprise.
The bill allows foreign cooperative organizations to become a regular
or associate member of cooperative banks.
The bill sets the maximum limit for the qualified foreign cooperative investor at 40% of the voting shares for the cooperative bank.
The bill seeks to exempt loans, credit accommodations and guarantees extended by the cooperative bank to its primary cooperative members from the DOSRI limits as provided in Section 36 of the General Banking Act.
The measure also provides for the strengthening of the cooperative bank’s regulatory capital requirement by not deducting the loans, credit accommodations and guarantees extended by cooperative banks to its primary cooperative members.
It further encourages local banking institutions, whether private or government to deposit with the cooperative banks at least 25% of their total loanable funds under the Agri-Agra Reform Credit Act of 2000.
The bill also clarifies the privileges and incentives of cooperative banks.