A SENIOR House member has sought to allow foreign investors to infuse money in rural banks.

In House Bill 4519, Pwersa ng Masang Pilipino Rep. Rufus Rodriguez of Cagayan de Oro wants Republic Act 7353 or the Rural Bank Act of 1992 to allow limited foreign ownership of rural banks in the Philippines.

Rodriguez noted that since June last year, numerous rural banks were on the brink of ruin and no less than former Philippine Deposit Insurance Corp. (PDIC) president Jose Nograles admitted that more or less 15 percent or 179 of the rural bank population have been weakened and under some form of financial distress.

Rodriguez said while the Bangko Sentral ng Pilipinas is doing everything it can to save these rural banks, it is not enough.

The legislator said BSP Deputy Governor Nestor Espenilla Jr. said that a plan to allow foreign interests to acquire equity in rural banks had been abandoned as this requires change in legislation.

“It is in this line that this bill is filed. It is about time that foreign investors be allowed to infuse their money in rural banks,” said Rodriguez.

Quoting the Rural Bankers Association of the Philippines, Rodrigiuez said industry players have received proposals from foreign investors but foreign cash infusion into rural banks cannot push through because the law prohibits it.

Under RA 7353, the capital stock of rural banks shall be fully owned by citizens of the Philippines.

As embodied on Rodriguez’s bill, “at least 40 percent of the voting stock of a rural bank shall be owned by citizens of the Philippines, except where a new bank may be established as a result of existing thrift banks with foreign holdings shall not be increased but may be reduced and once reduced, shall not be increased thereafter beyond 60 percent of the capital stock of rural banks. The percentage of the foreign-owned capital stocks shall be determined by the citizenship of individual stockholders and in case of corporations owning shares, by the citizenship of each stockholder in the said corporation.”