Chapter 8 8.

1 A, L, C
Thrift Institution
Video:
- Thrift banks are depository intermediaries that sell
secondary securities in the form of time and secondary
saving deposits
- Invest principally in residential mortgage and consumer
loans
- >Savings banks
 Thrift institution get their fund by setting
savings deposit
 They invest these incoming funds in mortgage,
corporate bonds, and consumer loans
- >Private Development Bank
 Are concerned w/ economic, social or political
needs of a country rather by commercial alone
 Lend most exclusively to private businesses
and in general, make intermediate to long term
loans
 Luzon dev’t bank; north point dev’t bank
- >Microfinance Thrift bank
 For micro people, SMEs
 It is devoted to extending small loans, referred
to as microloans to individuals, businesses, and
organizations
 Classifications of microfinance functions(BSP)
1. Microfinance oriented thrift banks
2. Microfinance engaged thrift banks
3. Microfinance oriented bureau banks
- Stock Savings and Loan Association
 They provide credit and saving facilities in a fair
manner to the consuming public, industry,
commerce, and agriculture
 They raise most of their funds by offering
savings deposits to the public and devote most
of their assets to home mortgage and other
residential-related loans and securities
 Two types
1. Stock
2. Nonstock
Report
Thrift Institution- saving and loan association that refers to
credit union and mutual saving banks that provide saving and
loan services. It has access to lower cost funds from
organizations like Federal Home Loan Banks
- The first mandate is to the members of the thrift, not in profit
- By law, thrifts must have 65% of their lending portfolio tied
up in consumer loans
- Feb 2019: 2654 thrift bank offices
8.2 Regulatory Environment
R.A. No. 7906 = Thrift Banks Act of 1995
- AN ACT PROVIDING FOR THE ORGANIZATION AND
OPERATIONS OF THRIFT BANKS, AND FOR OTHER PURPOSES
CHAPTER I- Declaration of policy and definitions
a. Recognize the indispensable role of the private
sector
b. Promote economic dev’t pursuant to the
socioeconomic program of the gov’t
c. Encourage and assist the establishment of thrift
bank system w/c will promote agriculture and
industry and at the same time place within easy
reach of ppl the medium-and long-term credit
facilities at reasonable cost
d. Encourage industry, frugality and the accumulation
of savings among the public, and the members and
stockholders of thrift banks
e. Regulate and supervise the activities of thrift banks
CHAPTER III- Ownership and capital reqs
- At least 40% of the voting stock shall be owned by the
citizens of the Philippines, EXCEPT where a new bank
may be established as a result of merger or
consolidation of existing thrift banks w/ foreign
holdings

3 Categories
1. Credit Union
2. S&Ls
3. Mutual savings bank- nonprofit institution that
provides low cost home mortgage loans; MIXED 1&2
CHAPTER 9
9. Credit Union- puts people before profits
- Financial cooperative where people come together to
help each other reach their financial goals
- People helping people
- Locally run by volunteers who are members
- Make decisions on your behalf for the benefit of all the
members and the credit union
- Surplus earnings are returned to members in diff. ways:
1. Lower interest rates on loans
2. Higher interest rates on savings
3. Lower fees
4. More free services than banks
- When you open an account at a C.U. you became a
member owner with one share
9.3 Regulation of Credit Unions
AN ACT AMENDING THE COOPERATIVE CODE OF THE PHILS. TO
BE KNOWN AS THE “PHILIPPINE COOPERATIVE CODE OF 2008”
ART. 4. COOPERATIVE PRINCIPLES
1. Voluntary and Open Membership
2. Democratic Member Control
3. Member Economic Participation
4. Autonomy and Independence
5. Education, Training and Information
6. Cooperation Among Cooperatives
7. Concern for Community

9.1 Credit Union’s Asset. Liabilities, and Net Worth

- Assets:
1. Cash- an asset that usually earns no income
2. Investments- income earning asset (earn
interest)
3. Loans- Largest asset and the major income of
CU (Allowance for Loan loss)
4. Fixed Asset- tangible assets
5. Other Asset- Accrued income & prepaid
expenses
- Liab:
1. Accounts payable
2. Notes payable
3. Other Liab
- Capital:
1. Member Shares and Savings- members’
2. Statutory reserves- required by law
3. Special reserves- voluntary reserves
4. Undivided earnings- total net income less
statutory reserves

9.2 Cooperative Arrangements

State must ensure that all coop. arrangements:
a) Contain a clear description of specific duties, functions and
responsibilities of each party
b) Specify clear and definite standards of performance w/c
meet federal reqs.
c) Specify that the parties comply with title IV-D of the act,
implementing Federal regulations & any other regs.
d) Specify the financial arrangements including budget
estimates, covered expenditures, methods of determining
costs, procedures for billing the IV-D agency, & any relevant
Federal & state reimbursement reqs. & limitations
e) Specify the kind of records that must be maintained and the
appropriate Federal, state and local reporting & safeguarding
reqs.
f) Specify the dates on w/c the arrangement begins and ends,
any conditions for revision or renewal, & the circumstances
under w/ the arrangement may be terminated
CHAPTER 10