The Bangko Sentral ng Pilipinas

The Bangko Sentral ng Pilipinas (BSP) was created by the Republic Act No. 7653, otherwise known as the
New Central Bank Act of 1993.
The BSP is now the Philippines’ central monetary authority that provides policy directions in the areas of
money, banking and credit.
The BSP’s powers and functions are exercised by its Monetary Board, consisting of seven members
appointed by the president of the Philippines.
One of the government sector members of the Monetary Board must be a member of the Cabinet designated
by the President of the Republic, which position is currently held by the Secretary of Finance.
The New Central Bank Act authorizes the Governor of BSP to appoint up to three Deputy Governors, subject
to the approval of the Monetary Board.
The Governor is the chief executive officer of the BSP and is required to direct and supervise the operations
and interval administration of BSP.
The BSP is aided in its bank monitoring and examination processes by credit rating agencies and financial
conglomerates.
The BSP is also into the upgrading of its domestic prudential standards in areas of capitalization, connected or
pooled lending, loan provisioning, data disclosure, and qualifications of owners and managers.
The BSP likewise imposes the requirements on the operations on e-bankers.
The BSP is backstopped in this regard by the passage of e-commerce law in June 2000 which facilitated the
exchange of information and promoted the security of electronic transactions.
The Banking Institution
The Banking Institution in the Philippines can be categorized as private banking and government banking.

 The private banking institutions are comprised of commercial banking such as universal banks and ordinary
commercial banks; thrift banks like savings and mortgage banks, private development banks, and stock
savings and loan association; and the rural banks.
 The government banking institutions, on the other hand, consist of Philippine National Bank, Development
Bank of the Philippines, Land Bank of the Philippines, and the Philippine Amanah Bank

 
Private Banking Institution

1. Commercial Banking Institutions.

2. Thrift Banks
3. Savings and Mortgage Banks
4. Savings and Loans Association
5. Private Development Bank
6. The Rural Banks

 
Commercial Banking Institutions
The Banks that fall under commercial banking institutions are the ordinary commercial banks or non-expanded
commercial banks. These banks continue to account for the bulk of the total resources of banking industry.
 
The Thrift Banks
Thrift banks are primarily engaged in mobilizing the small savings of the people. They provide funds for agriculture and
industry at reasonable interest rates. The small producers like farmers, fishermen, craftsmen, and poor consumers can rely
on such banks for financing their production and consumptions inputs. The following banks fall under the category of
Thrift Banks
 
The Savings and Mortgages Banks
The Savings and Mortgages Banks. The primary function of a savings and mortgage bank is to receive time deposit of
different types and to invest its funds in long term investment.
 
The Savings and Loan Association
Very similar to the savings and mortgage banks are the savings and loans associations nowadays. However, these
institutions may either be stock or non-stock corporations.
 
The Private Development Banks
This is quite different from the government institution of the same name. It is a government entity, formerly the
Rehabilitation Finance Corporations.
 
The Rural Banks
Rural Banks fulfil the investment function by allowing small farmers to finance their needs through the granting of loans
for capital or other uses.
 
Government Banking Institutions

1. The Philippine National Bank. The Philippine National Bank (PNB) operates under the provision of
Executive Order No. 80, the 1996 revised charter of PNB.
2. The Development Bank of the Philippines. The Development Bank of the Philippines (DBP) started operating
in 1935 as the National Loan and Investment Board. Its first mission was to coordinate and manage trust
funds.
3. The Land Bank of the Philipines. The Agrarian Reforms Code created the Land Bank of the Philippines
(LBP) to finance the acquisition and distribution of agricultural estates for division and resell these small
landholders.
4. The Al-Amanah Islamic Investment Bank of the Philippines. The Al-Amanah Islamic Investment Bank of the
Philippines (Islamic Bank) was created under Republic Act No. 6848 for the purpose of promoting and
accelerating the socio-economic growth of Mindanao, particularly the provinces of Cotabato, Lanao del Sur,
Lanano del Norte, Zamboanga del Sur, Zamboanga del Norte, and Sulu.

 
Non-Bank Financial Institution
These are other financial institutions which engage in specific functions. They provide services related to claims, financial
information, and advice, manage portfolios of financial assets on behalf of other economic units, buy and sell claims on
institution from clients, and assist in finding sources for those economic units seeking loans. These either private or
government non-bank financial institution.
 
Private Non-Bank Institutions

1. Investment House/Banks.
2. Securities Brokers/dealers.
3. Building and Loan Associations.
 4. Credit Unions.

 
Investment House/Banks
The term “investment house” is defined to mean as “any enterprise” which engages in the underwriting of securities of
other corporations. Underwriting is the act or process of guaranteeing the distribution and sale of securities of any kind
issued by another corporation. Securities are written evidences of ownership, interest, or participation in any enterprise, or
written evidences of indebtedness of a person or enterprise.
 
Securities Brokers/dealers.
Pursuant to the provision of the Revised Securities Act, no broker, dealer, or salesman must engage in business in the
Philippines as such broker, dealer, or salesman or sell any securities, including securities exempted under the said law.
 
Building and Loan Associations.
A building and loan association is a special type of savings institution. Because of its very nature, however, it falls under
this category in view of the fact that it also receives savings from members and lends fund to them.
 
Credit Union.
A credit union is another type of savings’ institutions. It also has for its purpose the inculcation of the habit of thrift,
frugality, and the idea of helping one another.
 
Private Insurance
Private insurance companies contribute to the country's socio- economic development as well as to the insured.