3.14.2017

Difference between Rural banks and Cooperative Banks

By Nora

What's the difference between rural banks and cooperative banks?


They differ in type of ownership.
Rural banks are owned and managed by private entities or individuals.
Cooperative banks are owned, organized and managed by cooperatives or federation of cooperatives.

What are common between rural banks and cooperative banks?
They serve rural communities.  They lend money to farmers, fishermen, merchants, cooperatives and owners of small business operations in their areas on reasonable terms.

According to Republic Act No. 7353, an act providing for the creation, organization and operation of rural banks, and for other purposes, here are what rural banks can do and shall do:

 Rural banks are organized in the form of stock corporations.

 Rural banks shall grant loans primarily to farmers or farm families that own or cultivate agricultural lands, fishermen, merchants, and cooperatives.

 They're required to prioritize loan applicants who are applying for smaller loan amounts.

 They can lend to owners of small business enterprises in rural areas, but only up to 15% of any one bank's total net worth.

 They can offer these services:


  • Accept savings and time deposit
  • Open current or checking accounts (only rural banks with net assets of at least 5 million pesos (subject to change) 
  • Act as a correspondent for other financial institutions
  • Act as a collection agent
  • Act as official depositary of municipal, city or provincial funds in the municipality, city or province where it is located
  • Rediscount paper with the Philippine National Bank, the Land Bank of the Philippines, the Development Bank of the Philippines, or any other banking institution, including its branches and agencies. 
  • Offer other banking service (Section 72 of Republic Act No. 337, as amended)
  • Extend financial assistance to public and private employees (Section 5 of Republic Act No. 3779, as amended)

Top Rural Banks in the Philippines, based on Total Assets as of September 2017

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