BANKS

“An entity duly authorized by the Monetary Board of the

Central Bank that may engage in the lending of funds
obtained from the public through the receipts of deposits of
any kind and all entities regularly conducting such
operations”
ROLE OF BANKS
• Bank serve as depository of idle funds.
• Bank serve as a major source of loanable funds.
• Banks also give counsel on financial matters.
• Banks employ people who are experts on various
fields, who can advise companies and businessmen on
their financial problem.
BRIEF HISTORY OF BANKING
 History traces that the banking practices date back as early as 2000 B.C in the temples of
Babylon where the lending of gold, silver and other items of wealth were left for safe keeping.
 It was in Greece that banking attained its height of development because the Greeks kept traces
of good records.
 The first known registered banking institution as recorded in the history was established in Venice
in 1157 A.D.
 During the seventeenth and eighteenth centuries, banking started to develop.
 Continental Europe lagged behind England in developing commercial Banking.
 The Bank of France was organized in 1800 by Napoloen Bonaparte.
 Canadian Banking had been greatly influenced by the United States and Great Britain because
of Canada’s close historical relationship with both countries.
 The first important bank in the United States wad the Bank of North
America. It was established in 1781 by the Second Continental Congress.
 During the civil war, the Federal Government financed its outlays in part
by printing irredeemable paper money called greenbacks.
 The depression in the 1930’s gave a reserve blow to the commercial
banking industry.
BANKING IN THE PHILIPPINES
• The Philippine banking system has evolved gradually over the span of more than a century,
starting from one bank in 1851 to a multi-faced system which supplies credit to the growing
financial requirements of every sector in country’s economy.
• Formal banking started in the country with the establishment of the El Banco Espanol-Filipino
de Isabel II.
• It was also during the Spanish time that the country’s first savings bank was established.
• During the American period, those banks, which already existed, were allowed to continue
operations.
• The Philippine Bank Of Commerce, which was the first private commercial bank in the country
wholly owned by Filipinos, was opened for business in 1938.
• At the outbreak of World War II, the Philippines was occupied by the Japanese
Imperial Forces.
• The Japanese occupation left the banking system in a state of almost total
collapse.
• In 1948, upon the enactment of the RA#265 or the so called Cntral Bank Act, the
Central Bank of the Philippines was created.
 BANKO SENTRAL NG PILIPINAS
1. Change in the composition of the Monetary Board
2. It has for its primary objective the adoption of price stability conducive to a balanced sustainable growth for
the economy and the maintenance of monetary stability and the convertibility of the peso.
3. Strengthening of the regulation and the supervision framework for banks and quasi-banks through, among
others, indemnification of Monetary Board members and other officials of Banko Sentral.
4. Abolition of two suspense accounts MAA and ESAA.
5. The phase-out of fiscal agency function.
6. The phase-out of regulatory functions over finance companies without quasi-banking functions within a
period of five years.
7. Require additional mandatory reports to assure accountability.
8. The financial restructuring of the CB upon the effectivity of this law.
9. The imposition of requirements on trust accounts.
10. Loans and advances made by the CB to any bank.
 CLASSIFICATION OF BANKS
• COMMERCIAL BANKS
-Commercial Banking Corporation shall be any corporation, which accepts or creates demand deposits
subject to withdrawal by check.
-Commercial banks may acquire readily marketable bonds and other debt securities subject to such rules
as the monetary Board may promulgate.

• THRIFT BANKS
- these are banks established to encourage thriftiness, industry, frugality, and the accumulation of savings
among the people.
POWERS GRANTED UNDER THE GENERAL BANKING ACT TO THRIFT BANKS
a) Accepts savings and time deposits.
b) Open current or checking accounts.
c) Act as a correspondent for other financial institutions.
d) Act as a collection agent for government entities.
e) Act as a official depository of national agencies and of municipal city, or provincial funds in the
municipality.
f) Rediscount paper with the Land Bank of the Philippines the Development Bank of the Philippines and
other government owned and controlled corporations.
g) Issue mortgage and chattel mortgage certificates, buy and sell them for their accounts.
h) Engage in quasi-banking and money market operations.
i) Open domestic letters of credit.
j) Extend credit facilities to private and government employees.
k) Extend credit against security of jewelry, precious stones and articles of similar nature.
THRIFT BANKS MAY INVEST IN ALLIED UNDERTSKINGS SUBJECT TO THE GUIDELINES ESTABLISHED BY THE MONETARY
BOARD OF THE CENTRAL BANK PROVIDED THAT:

a) The total investment in equities shall not exceed 25% on the net worth of the
bank;
b) The equity investment in any single enterprise shall be limited to 15% on the
networth of the thrift bank;
c) The equity investment of the thrift bank in any single enterprise shall remain a
minority holding in that enterprise; and
d) The equity investment in other banks shall be subject to the same provisions
governing similar investments of commercial banks and shall be deducted from
the investing bank.
 INVESTMENT IN ALLIED UNDERTAKING SHALL INCLUDE INSTITUTIONS ENGAGED IN THE FOLLOWING ACTIVITIES;

a) Banking and financing;

b) Warehousing and other post harvesting activities;
c) Fertilizer and agricultural chemical and pesticide distribution;
d) Farm equipment distribution;
e) Trucking and transpiration of agricultural products;
f) Marketing of Agricultural products;
g) Leasing; and
h) Other undertaking as may be determined by the Monetary Board.
THRIFT BANKS ARE SUB-CLASSIFIED AS FOLLOWS:
1. Savings and Mortgage Banks

2. Savings and Loan Association

3. Private Development Banks