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8/3/2019 Chapter 1 - Phil. Banking System
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The Philippine Financial System
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Philippine Banking System
Is composed of universal banks and commercial
banks, thrift banks, rural and cooperative banks
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Commercial banks
Includes regular commercial banks and
expanded commercial banks or universal banks Represents the largest single group, resource-wise of financial institutions of the country
Limited only to institutions which, in addition to
other functions, could accept deposits calleddemand deposits subject to withdrawal by check
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Functions ofCommercial banks
Administration of checking accounts, along with
accepting savings and time deposits Extend loans not only to individuals but to alltypes of business firms including other financialinstitutions and governments
Deal in foreign exchange Rent deposit boxes
Have Trust Dept. For the administration ofestates
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Functions ofCommercial banks
Act as insurance agents
Finance / facilitate international trade
FUNCTIONS OF COMMERCIAL BANKS ARECLASSIFIED INTO:
1. Collection function 5. Trust function 2. Paying function
3. Loaning function
4. Receiving function
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Thrift banks
Composed of savings and mortgage banks,
private development banks, stock savings andloan association and microfinance thrift banks
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Functions ofThrift banks
Accept savings and time deposits Grant loans Invest in readily marketable bonds and other
debt securities, commercial papers and accountreceivables, drafts and bills of exchange,
Issue of domestic letters of credit Can accept checking accounts, government
deposits, foreign currency deposits Perform trust functions upon prior approval of
Central Bank
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Functions ofThrift banks
Provide short-term working capital and
medium-and long-term financing to businessesengaged in agriculture, services, industry andhousing, and diversified financial and alliedservices, and to their chosen markets and
constituencies, especially small and mediumenterprises and individuals
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Thrift banks
Differ in commercial banks in that they can not
engage in international banking operations
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Rural and cooperative banks
Regional banks operating primarily to serve the
needs of people Their role is to promote and expand the ruraleconomy in an orderly and effective manner byproviding the people in the rural communities
with basic financial services
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Functions ofRural banks / Cooperativebanks Grant short term loans to farmers, and
cooperatives to finance their requirements in thepursuit of their business which are principallyaimed at countryside development
Accept savings and time deposits to accumulatefunds for local development
Serve as channels for disbursement andcollection of supervised credit programs
Act as correspondents for other financialinstitutions
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Specialized government banks
Those created by the government for specific
purposes under special charters such asDevelopment Bank of the Philippines, LandBank of the Philippines, and the Philippine
Amanah Bank
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Development Bank of the Philippines
Established in 1946 as the Rehabilitation
Finance Corporation to attend to therequirements of rehabilitation and developmentof World War II
Today, its task is to develop and develop
expansion of agricultural industry and topromote the establishment of privatedevelopment banks
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Development Bank of the Philippines
Lending activities are concerned on
development projects such as in agriculture,industry and low cost housing
Also undertakes investment banking functions
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Land Bank of the Philippines
Was organized in 1963 to provide timely and
adequate financial support to the AgrarianReform Program
Its lending activities are geared primarilytowards helping farmers acquire land under the
agrarian reform program and financing thecultivation of these lands and marketing of theproduce
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Land Bank of the Philippines
Grants loans and farmers cooperatives /
associations to facilitate production, marketingof crops and acquisition of essentialcommodities
Also performs the functions of a universal bank,
including trust functions
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Philippine Amanah Bank
Established in 1974 to promote and accelerate
the socio economic development of Mindanao,especially in Muslim provinces
Provides credit, commercial, development andsavings banking facilities at reasonable terms to
the people of the Muslim provinces of Mindanaoincluding Palawan
Based on Islamic concept of banking (no interestand partnership principles)
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Non banks with quasi bankingfunctions Consists of institutions engaged in borrowing of
funds from 20 or more lenders for theborrowers own account through issuances,endorsement or assignment with recourse oracceptance of deposit substitutes for purpose of
relending or purchasing receivables and otherobligations
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Non-depository institutions
Insurance companies
Investment companies
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Other Financial Institutions
Investment banks
Venture capitalists Brokerage houses
Securities Exchanges