Banking Reviewer bank’s book of accounts as unearned interest income.

so, is not legally obligated to honor the borrower’s

a cash deduction on the regular price of goods as an need when circumstances do not permit advancing of
GROUP 8 BANK RESERVES attraction to buyers. In banking term, it is a fund use funds
to accommodate a borrower
PRIMARY RESERVES REGULATION - Collateral. If the businessman fails
-cash, deposits due from other banks, and the reserves RELATIONS OF LOANS TO DEPOSIT- Loans to pay, the bank could at least recover from the
required by the Federal Reserve System and a deposits complement each other, as the amount security given. Another is to make the businessman
-assets that a bank has on hand to cover withdrawals, of loans a bank could extend will depend largely on its clear his accounts periodically to show proof of his
loans and other activitie ability to attract and retain large deposits capacity to pay. The bank may also require marginal
deposits to establish the liquidity of the borrower to a
FACTORS AFFECTING SIZE OF PRIMARY Types of Loans GRANTED BY BANKS certain extent
RESERVE 1. DEMAND OR CALLABLE LOAN
Regulatory Requirement; Economic Condition ; - Does not have definite maturity UNSECURED VS.SECURED Lines of Credit A
Interest Rates ; Asset Quality Risk Management 2. Time loan line of credit (LOC) is a preset borrowing limit that
Processes ; Liquidity Profile ; Business Model and - Payable at specified future time can be tapped into at any time. The borrower can take
Operations Regulatory Changes ; Market Sentiment 3. SHORT-TERM, MEDIUM-TERM, OR money out as needed until the limit is reached. As
Central Bank Policies LONG-TERM money is repaid, it can be borrowed again in the case
- Banks may extend loans against the general of an open line of credit
SECONDARY RESERVES credit standing of the borrower. - Most term
A working reserve is mandatory but lacking for loans operate on a specified schedule Most LOCs are unsecured loans which are more
maintaining normal banking operations. In a simple requiring a specific payment size at certain difficult to obtain and often require a higher credit
sense, the bank keeps the assets or securities in the intervals. - Collateral is required if the loan is score or credit rating. From the lender’s perspective,
near-cash form to maintain liquidity longer than a year. secured LOCs are attractive because they provide a
- To avoid a liquidity crisis way to recoup the advanced funds in the event of
- To earn a moderate - income OTHER CLASSIFICATIONS OF BANK LOANS nonpayment.
- To trade-off between liquidity and ACCORDING TO PURPOSE a. Commercial or
profitability mercantile credit b. Investment credit c. Industrial LOAN PORTFOLIO -is the balance of all loans that
credit d. Agricultural credit e. Real Estate credit f. the bank has issued to individuals and entities,
INVESTMENT RESERVES Personal credit-(Consumer credit calculated on a specific date
refer to funds that are set aside by individuals, ACCORDING TO THE FORM ON HOW CREDIT IS
companies, or organizations for the purpose of GRANTED a. Direct loan b. Discount loan and LOAN & DISCOUNT DEPARTMENT -is the
making investments rediscount loan c. Overdraft line department may invariably be dubbed as either the
ACCORDING TO MATURITY a. Short-term b. “Loan and Discount Department”or the “Credit
GROUP 9 LOAN DISCOUNT FUNCTION Medium-term c. Long-term Department"which is further sectioned into
specialized tasks such as processing of loan
Loans and a discounts, in banking terms, mean the LINES OF CREDIT -A ‘line of credit’ is being applications
same thing. These are amounts extended to persons accorded to a bank customer. A bank uses such favors
needing capital or for some other purpose. as a policy of attraction to big depositors. It must,
therefore, be a special concession given to a select few, PROCEDURE FOR LOAN APPLICATION AND
LOANS loans are advances on which interest is for it does offer several conveniences for a busy PROCESSING
collected at maturity. A loan is a form of debt incurred businessman . - Initial contact
by an individual or other entity. The lender—usually a - Meeting
corporation, financial institution, or government. The bank for its part will first make a careful study of - Analysis
the needs of the businessman. It will, at the same - Documents result
DISCOUNTS accounting term that interest is paid in time, ascertain t h e risk involved. In other words, c r e - Processing
advance although not yet earned. entered in the investing should be conducted. But, the bank, in doing - Settlement
 matter of follow-up and collection becomes important Thrift Banks are primarily engaged in mobilizing
Three Phase of CREDIT INVESTIGATION when a borrower asks for an extension. For this would the small savings of the people. They provide funds
INVESTIGATION During this phase, officers collect be the first signal of impending financial reversal. for agriculture and industry at reasonable interest
comprehensive data about the loan applicant. The Banks follow normal procedures of sending reminders rates. The small producers like farmers, fishermen,
bank’s officer in charge will be able to determine with on due dates and mild letters of reproach for delayed craftsmen, and poor consumers can rely on such
some precision the borrower’s character, capacity, payments. It also takes the necessary drastic action in banks for financing their production and consumption
capital, or collateral. Such details could be obtained case of delinquent debtors. Court action is usually inputs.
from direct or indirect sources. taken care of by its legal department - PRIVATE DEVELOPMENT BANK
ANALYSIS Once the information is gathered, it is a type of financial institution that specializes in
undergoes a detailed analysis. This analysis involves GROUP 10 THE PHILIPPINE FINANCIAL SYSTEM offering savings accounts and originating home
assessing the applicant's financial stability, credit mortgages for consumers. This is quite different from
history, debt-to-income ratio, and the overall risk Depository Institutions A financial institution the government institution of the same name.
involved in lending. Financial ratios, past that obtains its funds mainly through deposits from - Savings and Mortgage Bank
performance, and market trends may be considered the public. This includes commercial banks, savings the primary function of savings and mortgage bank is
during this phase. The goal is to evaluate the and loan associations, savings banks and credit to receive time deposit of different types and to invest
applicant's ability to repay the loan and to determine unions. its funds in long term investment.
the level of risk associated with the credit. - Stocks Savings and Loan Associations
FILING After the analysis, the gathered data is Bangko Sentral ng Pilipinas (BSP) It drives very similar to the savings and mortgage banks are
organized, filed, and updated for future reference. programs and advocacies to ensure that the reach of savings and loans associations nowadays. However,
Proper documentation of the findings is crucial for financial services expands to the unserved and these institutions may either be stock or non-stock
legal and auditing purposes. Additionally, the underserved segments of the population, especially corporations
information needs to be kept current to reflect any the country ' s most vulnerable. To promote and
changes in the applicant's financial status. This phase maintain price stability, a strong financial system, and Rural Banks it fulfill the investment function by
involves maintaining strict confidentiality, ensuring a safe and efficient payments and settlements system allowing small farmers to finance their needs through
that the data is accessible only to authorized conducive to a sustainable and inclusive growth of the the granting of loans for capital or other uses.
personnel, and updating records regularly to keep economy Specialized Government Banks are completely
track of the borrower's creditworthiness over time government-owned institutions established mainly to
Classification of Banks provide medium and long-term credits to the
Universal Banks are financial service industrial, agricultural, and real estate sectors of the
CREDIT INVESTIGATION ON REPORT conglomerates that combine investment banking, economy
This report is rendered by the credit department commercial banking, development banking, and
bank. It is used as a guide by the loaning officer loan insurance to encompass a wider variety of services. COOPERATIVE BANK refers to a small financial
committee in arriving at the loan decision. Such a They are also authorized to engage in other functions institution started by a group of individuals to address
report is prepared based on the results of the such as merchant banking, mutual funds, factoring, the capital needs of their specific community. Such
investigation and analysis as well as other criteria of housing finance, and practically all types of functions financial institutions are owned and controlled by
the credit investigator typical in the banking business. their members, and the board members are
democratically selected to oversee the operations
CONTROL OF Credit Credit control is defined as Commercial Banks are privately-owned
the lending strategy that banks and financial institutions that accept deposits and lend money to Classification of Banks & its Role in our
institutions employ to lend money to customers. The projects to earn interest. They also offer personal, economy
strategy emphasizes lending money to customers who business, and mortgage loans, checking account Universal banks in the Philippines are like financial
have a good credit score or credit record. services, and basic financial products like savings helpers. They do a lot of things to make sure the
- Banko Sentral Restriction accounts and certificates of deposit to individuals and country's money system is strong, businesses can
- Bank credit Control businesses. They are primarily owned by shareholders grow, and people can have jobs and opportunities.
- Credit Limits and are profit-based
FOLLOW-UP AND COLLECTION OF LOAN the Commercial banks in the Philippines have a direct
and far reaching impact on the economy. From of their clients. Security dealer/brokers play a crucial
supporting businesses and real estate development to - Bangko Sentral ng PILIPINAS BSP role in ensuring the smooth functioning of the
fostering financial stability and efficiency, commercial The BSP is the central bank of the Philippines and has securities market
banks are integral to the economic wellbeing of the regulatory authority over NBFIs engaged in financial
country. intermediation activities. This includes finance SECURITIES/BROKERS DEALERS Pursuant to
companies, lending companies, pawnshops, and other the provision of the Revised Securities Act, no broker,
Thrift banks are vital to the Philippine economy by non-bank entities involved in credit extension and dealer, or salesman must engage in business in the
providing individuals and small and medium-sized financial services Philippines as such broker, dealer, or salesman or sell
enterprises (SMEs), particularly the unbanked and any securities, including securities exempted under
underbanked access to financial services. Securities can take various forms, including: the said law
Rural banks have been entrusted by the law with the Stocks, Bonds ,Mutual Funds Exchange-Traded Funds
vital and noble role of serving the financing needs of , Derivative 4. Investment Companies
farmers, fisherfolks and the people of rural Investment companies are entities that pool funds
communities to achieve inclusive economic growth. 1. INVESTMENT HOUSE/ BANKS from individual investors to create diversified
The term "investment house" is defined to mean as investment portfolios. They manage these portfolios
Specialized and government bank Specialized "any enterprise" which engages in the underwriting of on behalf of the investors, making investment
Bank activates and support the role of the private securities of other corporations " . Underwriting is the decisions and buying/selling securities to achieve the
sector in economic activities and are therefore one of act or process of guaranteeing the distribution and investment objectives of the funds. Their primary role
the most important pillars of economic reforms in sale of securities of any kind issued by another is to professionally manage investments and provide
some countries at the present time. corporation. Securities are written evidence of individuals with access to a diversified portfolio
ownership, interest, or participation in any enterprise, without directly managing it themselves
Cooperative banks are the most important funding or written evidence of Indebtedness of a person
providers for many households and SMEs, especially 5. Fund Manager
in poorer regions. Our empirical results show that 2. Financing Companies Fund managers are professionals responsible for
cooperative banks play a significant role in enhancing Finance companies are a type of non-bank financial managing investment funds on behalf of clients. They
local economic performance institution that provides financing and credit options oversee the investment decisions, portfolio
to individuals and businesses. They have assets and construction, and risk management of the funds.
NON-BANK FINANCIAL INTERMEDIARIES liabilities and offer loans and advances. Financing Their primary responsibility is to generate returns for
Nonbank financial institutions (NBFIs), are financial companies or partnerships, except those regulated by the investors and achieve the investment objectives of
institutions that offer various banking services but do the Bangko Sentral, the Insurance Commissioner, and the funds they manage
not have a banking license. Generally, these the Cooperative Administration Office which are
institutions are not allowed to take traditional primarily organized for the purpose of extending NON-BANK THRIFT INSTITUTIONS
demand deposits—readily available funds, such as credit facilities to consumer to industrial , commercial A non-bank thrift institution is a financial
those in checking or savings accounts—from the or agricultural enterprises organization that provides banking-like services but is
public. This limitation keeps them outside the scope not classified as a traditional commercial bank. These
of conventional oversight from federal and state Some common types of financing companies institutions typically focus on specific types of
financial regulators. that fall under the category Consumer Financing financial services, such as savings and loans, and often
Companies Industrial Financing Companies operate on a cooperative or member-owned basis.
WHO OVERSIGHT NBFI’s? Commercial Financing Companies Agricultural - Mutual Building and Loan Association
- Securities and Exchange Commission Financing Companies - Non-Stock Savings and Loan Association
(SEC)
The SEC is the main regulatory agency responsible for 3. Security Dealer/Brokers 1. MUTUAL BUILDING AND LOAN
overseeing and regulating NBFIs that are engaged in Security dealer/brokersare financial intermediaries ASSOCIATION
securities-related activities. This includes investment that facilitate the buying and selling of securities in A Mutual Building and Loan Association is a type of
companies, mutual funds, and other entities involved the financial markets. They act as intermediaries financial institution that operates on a cooperative
in the issuance, trading, and offering of securities. between buyers and sellers, executing trades on behalf basis. Members pool their savings to provide
mortgage loans and other financial services to each concealing the origin of money, obtained from illicit been frozen within the period determined by the
other activities court, the freeze order shall be deemed ipso facto
lifted. A person whose account has been frozen may
2. NON-STOCK SAVINGS AND LOAN Anti money laundering council (amlc) The Anti- file a motion to lift the freeze order and the court must
ASSOCIATION Money Laundering Council is hereby created and shall resolve this motion before the expiration of the freeze
A non-stock savings and loan association is a type of be composed of the Governor of the Bangko Sentral order.
financial institution where members pool their ng Pilipinas as chairman. • "No court shall issue a temporary restraining order
savings to provide loans and financial services, and it or a writ of injunction against any freeze order, except
operates without issuing stock or shares. to protect and preserve the integrity and the Supreme Court.
confidentiality of bank accounts and to ensure the
GOVERNMENT BANK INSTITUTIONS Philippines will not be used to clean a money from Section 14 Penal Provisions
A non-bank financial institution is a company that unlawful activities. (a) Penalties for the crime of Money Laundering- 7 to
offers financial services, but does not hold banking 14 years imprisonment and fine of not less than 3M
licenses and therefore cannot accept deposits Republic act of 9160 Anti-money laundering act of but not more than twice the value of money
2001(Amla) July,23, It helps to safeguard and instrument or property involved in the offense.
SSS ( SOCIAL SECURITY SYSTEM ) maintain the dignity of the Philippine financial (b) Penalties for Failure to Keep Records- 6 months to
The protection that a society provides to individuals system, including bank account security. It prevents 1 year imprisonment and fine of not less than 100K
and households to ensure access to health care and to the Philippines from being used as a but not more than 500K. (c) Malicious Reporting- 6
guarantee income security moneylaundering base for the profits of illegal months to 4 years imprisonment and a fine of not less
activities. than 100K but not more than 500K.
GSIS ( GOVERNMENT SECURITY SYSTEM ) (d) Breach of Confidentiality- 3 to 8 years
Provides social security coverage to employees in the Process MONEY LAUNDERING Placement - imprisonment and a fine of not less than 500K but not
public sector Introduction of illegal funds to financial system such more than 1M
as financial institution of banko
PAG - IBIG ( HOME DEVELOPMENT MUTUAL Layering - Having multiple financial transaction Republic act 10173 Data privacy act of 2012 It is
FUND ) Integration - Reintroducing the funds to the the policy of the State to protect the fundamental
Offers assistance to its members by providing economy to buy legitimate or to fund other criminal human right of privacy, of communication while
affordable financing for their housing needs activities - The main objective of this process is to ensuring free flow of information to promote
indeed from the legal source innovation and growth It is the policy of the State to
protect the fundamental human right of privacy, of
Responsibility Of Individuals UNDER ANTI- communication while ensuring free flow of
BANKING LAW GROUP 1 MONEY LAUNDERING ACT information to promote innovation and growth
1) Know you customer
R.A. 9576 The Philippine Deposit Insurance 2) Record keeping Definition of Terms
Commission June 1, 2009 exists to provide 3) Reportorial duties Data subject Refers to individuals whose personal
permanent and continuing deposit insurance coverage 4) Annual amla training information is process
for the depositing public to help promote public Personal information Refers to any information
confidence and stability in the econom Section 10 Authority of freeze Freeze order and from which the identity of an individual can be
Exceptions reasonably and directly identified by the entity
R.A. 9576 The Philippine Deposit Insurance • Verified ex parte petition by the AMLC Probable holding that information
Commission June 1, 2009 \ exists to provide cause exists Personal information controller Refers to a
permanent and continuing deposit insurance coverage • Court of Appeals may issue a freeze order • Effective person or organization who controls the collection
for the depositing public to help promote public immediately, and which shall not exceed six (6) holding processing or use of personal informatio
confidence and stability in the economy months depending upon the circumstances of the
case: DATA PRIVACY RIGHT
Money laundering is the process of illegally • If no case filed against a person whose account has  Right to be informed
  Right to access
 Right to object
 Right to blocking
 Right to damages
 Right to rectify
 Right to data portability

R.A 3765 - TRUTH IN LENDING ACT R.A. 3765,

also known as the "Truth in Lending Act, " is a law
designed to protect consumers by ensuring
transparency in lending transactions. In simple terms,
it requires lenders to provide clear and accurate
information about loan terms and costs to borrowers
before they agree to take out a loan. This includes
disclosing things like interest rates, fees, and
repayment terms so that borrowers can make
informed decisions about borrowing money. The goal
is to prevent deceptive practices and help borrowers
understand the true cost of the loans they're getting