Advantages of Having Rural Banks

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1.

Advantages of having Rural Banks

The establishment of rural banking system is advantageous because it is


designed to make needed credit available and readily accessible in the rural areas
on reasonable terms. It means that it meets the normal credit needs of farmers,
fishermen or farm families owning or cultivating land dedicated to agricultural
production as well as the normal credit needs of cooperatives and merchants. With
such means, the basic and important industries such as agricultural industries, will
be supported in its operations by making these banks accessible to farmers which
also plays crucial and vital role in the economy.

Another advantage is that Rural Banks can even grant loans even if the
property used as collateral is not covered by a Torrens title provided that there is
showing that there is Open, Continuous, Exclusive, and Notorious possession for 5
years. This is something that a big bank will not enter into because there is no
security that the person owns the property. Hence, Rural Banks makes the loan
services more accessible.

A rural bank may even act as a trustee and be the one that administers or
manages properties of farmers and merchants. This means that rural banks also
have trust services afforded to farmers and merchants in order to help them to
manage their properties

Lastly, Rural Banks have lower initial deposits and have a higher interest
rates as compared to commercial banks. Lower initial deposits required is a
signification that Rural Banks can be easily availed of by individuals who have not
much money to deposit.

2. Dormant Accounts and its Effects

Dormant accounts refers to current or checking accounts showing no deposit


or withdrawals for a period of one (1) year. It also refers to savings account
showing no deposit or withdrawal for a period of two (2) years.

The effect of such is that, if there is no activity for a certain number of


years, 2 years for savings account and 1 year for current deposits, the bank shall
notify the depositors. In this notice, there will be a warning that it will be included
in the unclaimed balances list. Once there is no action from the depositor, it will be
included in the unclaimed balances list. If there is still no activity for the period of
10 years, then there will be escheat. This is the same in succession. In escheat, this
property or this deposit will now belong to the state.

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