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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