Tax Exemptions for Thrift Banks

Types of Thrift Banks

• Thrift banks include savings and loan associations, mutual savings banks, and stock savings banks.
• Thrift banks focus on encouraging thrift and savings among individuals, particularly in the low-income segment.

Main Customers of Thrift Banks

• Thrift banks cater to individuals, especially those with low incomes, as well as small businesses and organizations.

Investments and Loans of Thrift Banks

• Thrift banks can make investments in bonds, loans secured by bonds, real estate mortgages, and other forms of security.
• They can extend credit against the security of deposits, securities, and other forms of collateral.

Purposes of Thrift Banks

• The primary purpose of thrift banks is to accumulate the small savings of depositors and invest them in various forms of security.

Regulatory Body

• The Bangko Sentral ng Pilipinas (BSP) determines the necessary investments and loans for thrift banks.

Development Banks

• The main purpose of Development Banks in the Philippines is to promote economic development.
• At least 75% of the loanable funds of a private development bank should be invested in medium and long-term loans for economic development purposes.

Private Development Bank

• The Philippine Veterans Bank is a Private Development Bank in the Philippines.

Savings and Loan Association

• The main purpose of a Savings and Loan Association in the Philippines is to encourage thrift and savings among its members.
• The maximum maturity date for a loan granted by a Savings and Loan Association is 20 years.
• The maximum percentage of the total assets of a Savings and Loan Association that can be borrowed from any lending institution is 20%.

Thrift Banks under RA 7906

• Thrift banks are allowed to accept various types of deposits, including demand and time deposits.
• They enjoy reserve requirement differentials compared to commercial banks, which means they have lower reserve requirements.
• One of the incentives provided to thrift banks under RA 7906 is that they are allowed to publish their statement of condition in a newspaper of general circulation.

Incentives and Exemptions

• Thrift banks are exempt from payment of all taxes, fees, and charges for a period of five years.
• They are exempt from publication requirements for foreclosure of mortgages and executions of judgments on real properties.
• They are allowed to foreclose lands mortgaged to them, provided that the lands are covered under Republic Act No. 6657.
• They are exempt from notarial charges when administering oaths or acknowledging instruments.
• They are exempt from registration fees for instruments related to loans or transactions, up to an amount not exceeding Fifty thousand pesos (P50,000).

Specific Savings and Loan Associations

• The Philippine Air Force Savings and Loan Association was established by the officers, enlisted personnel, and civilian employees of the 410th Air Materiel Wing of the Philippine Air Force.
• The Public Safety Savings and Loan Association dedicates itself to serving the members of the PNP, Bureau of Fire Protection (BFP), and their immediate family members.
• The Air Materiel Savings and Loan Association was first conceptualized to answer the ever-pressing need of soldiers for loans to augment their meager salary.
• The Philippine Army Finance Center Savings and Loan Association confined its deposit and lending operations only to members stationed in Manila, Quezon City, Caloocan City, Pasay City, and in the Greater Manila Area.
• The Philippine Navy Savings and Loan Association was incorporated with the primary purpose of fostering, promoting, and cultivating the habit of thrift and savings among its members.
• The Armed Forces of the Philippines Savings and Loan Association belongs to the top three biggest savings and loan associations in the country with total resources of almost 14.7 billion pesos and membership of over 21,000.