PERSPECTIVE

TYPES AND
SIGNIFICANCE OF
BANKING
GROUP 5
CENTINO CERNA DELOS SANTOS
WHAT IS BANKING?

The business
conducted or services
offered by a bank.
Principles of Banking Business
1. Partial Reserve System – certain
amount deposited will support
several times as much as in credit.
2. A greater portion of deposits in
commercial banks arises out of the
proceeds of loans.
 Types of Banks
• As to ownership
1. Privately owned
2. Publicly owned
• As to the place of incorporation
1. Domestic
2. Foreign
• As to Structure
1. Stock Corporation
2. Non-stock Corporation
• As to function and line of
development
1. Commercial Bank- one that
receives demand deposits and give
short-term loans.
2. Trust Company – deals in fiduciary
activities such as administrator of
estates, guardian of minor’s interest,
executor of last wills and testaments and
etc. This function was originally a legal
function and was handled by legal officers
and lawyers.
Savings or Thrift Banks – primarily
receives money for safekeeping from
person who have no immediate need
for cash and invest these funds in
long-term investments.
Rural Banks – primarily organized
to cater to the needs of small
farmers, small businesses, small
cottage industries and cooperative
associations.
Development bank – takes care of
giving loans to be used for
developing the economy and may
therefore engage in medium and
long-term lending.
Cooperative bank – is organized to
furnished the credit needs of duly
registered and operating cooperative
associations of different kinds.
Investment Bank – assist
government bodies and newly
organized corporations to raise funds
for capital through sale of stocks and
bonds.
Central bank – bank of all banks; it
does not directly deal with the
public. It is the supervisory and
regulatory agency which makes all
banks “tow the line”.
• As to management
1. Unit bank - refers to a bank that is single, usually small bank
that provides financial services to a local community.
2. Group bank - owned by two or more banks.
3. Branch bank - connected to one or more other banks; is backed
and ultimately controlled by a larger financial institution.
4. Chain Banking – is a group of bank minimum of 3 held
together by a group of individuals for effective banking
activities while the banks function independently without any
hindrance of holding company.
WHY THE STATE SUPERVISES
BANKS?
1. The banks are entrusted with other people’s
money
2. The state wants to assure that the banks will
perform their functions in the best.
3. The banks may either abuse their power or use
them prudently.
4. The banks are quasi-public corporations and as
in all other corp. of this calling.
THANK YOU!
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