Section 3
SEC. 3. Whenever the outstanding rediscounting obligations of a rural bank, when converted into government equity, are insufficient to meet the required capitalization as determined in Section 1 hereof, the Government shall directly subscribe to the balance thereof, such investment to be paid by government bonds to be issued by the Secretary of Finance to the rural bank concerned, which bonds may be pledged, sold or otherwise disposed of by the rural bank in accordance with rules and regulations that the Monetary Board shall prescribe. In case a rural bank has no outstanding rediscounting obligations with the Central Bank, the Secretary of Finance shall likewise issue the necessary amount of government bonds in favor of the rural bank to raise the Government equity to the desired level: Provided, however, That the total sum of such, direct investment of the Government and the rediscounting obligations converted into equity shall not exceed the aggregate rediscounting obligations of rural banks with the Central Bank of the Philippines outstanding as of June 30, 1974.