BANKING IN THE PHILIPPINES  Established on 3 July 1993 pursuant to the provisions of the 1987 Philippine Constitution

and the New Central Bank Act of 1993.

HISTORY
 1900
o Act No. 52 was passed by the First Philippine Commission placing all banks under
the Bureau of Treasury.
o The Insular Treasurer was authorized to supervise and examine banks and banking
activities.
 1933
o Particular group of Filipinos were trying to conceptualize a central bank for the
Philippines.
o Resulted from a careful understanding of the economic provisions of HARE HAWES
CUTTING BILL.
 February of 1929
o The Bureau of Banking under the Department of Finance took over the task of
banking supervision.
 1939
o A bill establishing a central bank was drafted by Secretary of Finance Manuel Roxas
and approved by the Philippine Legislature. However, the bill was returned by the
US government, without action, to the Commonwealth Government.
 February 1948
o President Manuel Roxas submitted to Congress a bill “Establishing the Central Bank
of the Philippines, defining its powers in the administration of the monetary and
banking system, amending pertinent provisions of the Administrative Code with
respect to the currency and the Bureau of Banking, and for other purposes.
 June 15, 1948
o The bill was signed into law as Republic Act No. 265 (The Central Bank Act) by
President Elpidio Quirino.
 January 3, 1949
o The Central Bank of the Philippines (CBP) was inaugurated and formally opened with
Hon. Miguel Cuaderno, Sr. as the first governor.
 July 3, 1993
o The Bangko Sentral ng Pilipinas (BSP) was established to replace the CBP as the
country’s central monetary authority.
o May initiative or napaguusapan na ng June 14, 1993
Bangko Sentral ng Pilipinas
 Central bank of the Republic of the Philippines.
 Took over from the Central Bank of Philippines, which was established on 3 January 1949,
as the country’s central monetary authority.
 Enjoys fiscal and administrative autonomy from the National Government in the pursuit of
its mandated responsibilities.
 VISION
o The BSP aims to be a world-class monetary authority and a catalyst for a globally
competitive economy and financial system that delivers a high quality of life for all
Filipinos.
 MISSION
o BSP is committed to promote and maintain price stability and provide proactive
leadership in bringing about a strong financial system conducive to a balanced and
sustainable growth of the economy. Towards this end, it shall conduct sound
monetary policy and effective supervision over financial institutions under its
jurisdiction.
 OBJECTIVES
o The BSP’s primary objective is to maintain price stability conducive to a balanced
and sustainable economic growth. The BSP also aims to promote and preserve
monetary stability and the convertibility of the national currency
 RESPONSIBILITIES
o The BSP provides policy directions in the areas of money, banking and credit. It
supervises operations of banks and exercises regulatory powers over non-bank
financial institutions with quasi-banking functions.
o Under the New Central Bank Act, the BSP performs the following functions, all of
which relate to its status as the Republic’s central monetary authority:
 Liquidity Management
 formulates and implements monetary policy aimed at influencing
money supply consistent with its primary objective to maintain price
stability. 
 Currency Issue
 has the exclusive power to issue the national currency. All notes and
coins issued by the BSP are fully guaranteed by the Government and
are considered legal tender for all private and public debts.
 Lender of Last Resort
 The BSP extends discounts, loans and advances to banking
institutions for liquidity purposes. 
 Financial Supervision
  The BSP supervises banks and exercises regulatory powers over
non-bank institutions performing quasi-banking functions
 Management of Foreign Currency Reserves
 The BSP seeks to maintain sufficient international reserves to meet
any foreseeable net demands for foreign currencies in order to
preserve the international stability and convertibility of the
Philippine peso.
 Determination of Exchange Rate Policy
 determines the exchange rate policy of the Philippines. Currently,
the BSP adheres to a market-oriented foreign exchange rate policy
such that the role of Bangko Sentral is principally to ensure orderly
conditions in the market.   BSP Main Complex
 Other activities, the BSP functions as the banker, financial advisor
and official depository of the Government, its political subdivisions
and instrumentalities and government-owned and -controlled
corporations.
GOVERNANCE OF THE BANK
 The Monetary Board
o exercises the powers and functions of the BSP, such as the conduct of monetary
policy and supervision of the financial system. Its chairman is the BSP Governor,
with five full-time members from the private sector and one member from the
Cabinet.
 The Governor
o the chief executive officer of the BSP and is required to direct and supervise the
operations and internal administration of the BSP.
 Deputy Governor
o heads each of the BSP's operating sector as follows:
 Monetary Stability Sector takes charge of the formulation and
implementation of the BSP’s monetary policy, including serving the banking
needs of all banks through accepting deposits, servicing withdrawals and
extending credit through the rediscounting facility.
 Supervision and Examination Sector enforces and monitors compliance to
banking laws to promote a sound and healthy banking system.
 Resource Management Sector serves the human, financial and physical
resource needs of the BSP
BSPS IN THE PHILIPPINES
o The BSP Main Complex in Manila houses the offices of the Governor, the Monetary
Board and the different operating departments/ offices. The Complex has several
buildings, namely: 5-Storey building, Multi-storey building, the EDPC building and
the BSP Money Museum, which showcases the Bank's collection of currencies
 BSP Security Plant Complex
o The Security Plant Complex which is located in Quezon City houses a banknote
printing plant, a securities printing plant, a mint and a gold refinery. The banknote
printing plant and the mint take care of producing currency notes and coins,
respectively.
 The BSP has three regional offices performing cash operations, cash administration, loans
and rediscounting, bank supervision and gold buying operations. These regional offices are
located in La Union, Cebu City and Davao City and 19 branches all over the Philippines.

Bangko Sentral ng Pilipinas
 Created by the Republic Act No. 7653, otherwise known as the New Central Bank Act of
1993.
 Now the Philippines’ central monetary authority that provides policy directions in the
areas of money, banking and credit.
 Powers and functions are exercised by its Monetary Board, consisting of seven members
appointed by the president of the Philippines.
o 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.
o 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.
o The Governor is the chief executive officer of the BSP and is required to direct
and supervise the operations and interval administration of BSP.
 Aided in its bank monitoring and examination processes by credit rating agencies and
financial conglomerates.
 Upgrading of its domestic prudential standards in areas of capitalization, connected or
pooled lending, loan provisioning, data disclosure, and qualifications of owners and
managers.
 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.
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
 Commercial Banking Institutions
o 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.
o BDO, MetroBank, BPI, Security Bank, China Bank
 Thrift Banks
o 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.
o Allied Bank, City Savings Bank, City Estate Savings Bank, Bank One Savings, Entrust
Corporation, Luzon Development Bank
 Savings and Mortgages Bank
 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.
 Philippine Resources (PR) Savings Bank, Producers Bank, Overseas
Filipino Bank, Equicom Savings Bank
 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.
 RCBC Savings, BPI Family Savings Bank, PS Bank (subsidiary of
Metrobank), Philippine Business Bank
 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.
 Focus on distinction of different properties
 Allied Banking Corporation, BDO Union Bank, WeBank
 Rural Banks
 Based on rural areas
 Fulfil the investment function by allowing small farmers to finance
their needs through the granting of loans for capital or other uses.
 Porac Rural Bank
GOVERNMENT BANKING INSTITUTION
 Philippine National Bank
o The Philippine National Bank (PNB) operates under the provision of Executive Order
No. 80, the 1996 revised charter of PNB.
  Development Bank of the Philippines
o 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.
 Land Bank of the Philippines
o 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.
 Al-Amanah Islamic Investment Bank of the Philippines
o 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.
 Building and Loan Associations
o 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.
o Greatly increase accessibility of building home loans
o Also receives savings from the members
o PAG-IBIG Housing Loan
 Credit Unions
o 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
o Private insurance companies contribute to the country’s socio- economic
development as well as to the insured.
o SunLife, ProLife UK, BDO Life, MaxiCare, PhilCare

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 INSTITUTION

 Investment House/Banks
o 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.
o Morgan Stanley, Deutsche Bank, Credit Swiss
 Securities Brokers/Dealers
o 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.
o Buying and selling security for its own account or in behalf of customer