BASIC FINANCE ASSIGNMENT BSA 1

ALBERT S. PETRAN
JACK ANERO
LURNA MAE EMPIS
RONELYN TUMULACK

1.) What is the different between direct and indirect transfer of savings to users of funds?
Direct transfers take place between a corporation and investor. An example of this would be an
initial public offering which is directly marketed to investors. There is no middle man. Indirect
transfer of assets involve an intermediary.
A direct transfer is typically a transfer of money from one retirement account to another,
facilitated by the two financial institutions involved. A direct transfer is usually done when an
employee has left their job and transfers the money within their 401(k) into an IRA (Individual
Retirement Account)
Indirect transfer through investment banks: in this process money flows from savers to
borrowers through an investment bank that underwrites the issue. An underwriter acts as a
facilitator for the issuance of securities.
Underwriter – are individual or institution who underwrite the securities of a company. They
help determine the prices of companies share in the market. There are different types of under
writers, such as underwriters for insurance, mortgage, securities, real estate, etc.
Indirect transfer refer to the situations where foreign entities own or share or assets in India,
the shares of such foreign entities are transferred instead of direct transfer of the underlying
assets in India.
2.) Describe several regulation that apply to the Banking system.
Republic Acts (RA) and Implementing Rules and Regulations (IRR) of RAs

R.A. No. Date Description

R.A. 3765 22 An Act to Require the Disclosure of Finance Charges in Connection with Extensions of Credit
Jun
1963

R.A. 6426 04 An Act Instituting A Foreign Currency Deposit System In The Philippines, and For Other Purposes
Apr
1972

R.A. 3591, as An act establishing the Philippine Deposit Insurance Corporation (PDIC Charter)
amended
Republic Act No. 3591
June 22, 1963

REPUBLIC ACT NO. 3591

AN ACT ESTABLISHING THE PHILIPPINE DEPOSIT INSURANCE

CORPORATION, DEFINING ITS POWERS AND DUTIES AND FOR OTHER
PURPOSES

SECTION 1. There is hereby created a Philippine Deposit Insurance Corporation hereinafter

referred to as the “Corporation” which shall insure, as herein provided, the deposits of all banks
which are entitled to the benefits of insurance under this Act, and which shall have the powers
hereinafter granted.

SECTION 2. The powers and functions of the Corporation shall be vested in a board of directors
consisting of three (3) members one of whom shall be the Governor of the Central Bank of the
Philippines and two of whom shall be citizens of the Republic of the Philippines to be appointed
by the President of the Philippines with the advice and consent of the Commission on
Appointments. One of the appointive members shall be the Chairman of the Board of Directors
of the Corporation who shall be appointed on a full time basis for a term of six (6) years at an
annual salary of twenty-four thousand pesos (P24,000.00). The other appointive member, who
shall be appointed for a term of four (4) years and the Governor of the Central Bank shall each
receive a per diem of not exceeding fifty pesos (P50.00) for each day of meeting actually
attended by them but in no case shall each of them receive more than five hundred pesos
(P500.00) a month. In the event of a vacancy in the Office of the Governor of the Central Bank
of the Philippines, and pending the appointment of his successor or during the absence of the
Governor, the Acting Governor of the Central Bank of the Philippines shall act as member of the
Board of Directors. In the event of a vacancy in the Office of the Chairman of the Board of
Directors and pending the appointment of his successor, the Governor of the Central Bank of the
Philippines shall act as Chairman. The members of the Board of Directors shall be ineligible
during the time they are in office and for a period of two years thereafter to hold any office,
position or employment in any insured bank, except that this restriction shall not apply to any
member who has served the full term for which he was appointed. No member of the Board of
Directors shall be an officer or director of any insured bank; and before entering upon his duties
as member of the Board of Directors he shall certify under oath that he has complied with this
requirement and such certification shall be filed with the Secretary of the Board of Directors.
Any vacancy in the Board created by the death, resignation, or removal of an appointive member
shall be filled by the appointment of new member to complete the unexpired period of the term
of the member concerned.{{1}}

The Board of Directors shall have the authority:

1. To prepare and issue rules and regulations as it considers necessary for the effective discharge
of its responsibilities;

2. To direct the management, operations and administration of the Corporation;

3. To appoint, fix the remunerations and remove all officers and employees of the Corporation,
subject to the Civil Service Law; and{{2}}

4. To authorize such expenditures by the Corporation as are in the interest of the effective
administration and operation of the Corporation.{{3}}
 3.) What is the Role of PDIC?

PDIC is a government instrumentality created in 1963 by Republic Act 3591, as

amended, to insure the deposits of all banks. PDIC exists to protect depositors by
providing deposit insurance coverage for the depositing public and help promote
financial stability.

PDIC is tasked to strengthen the mandatory deposit insurance coverage system to

generate, preserve, maintain faith and confidence in the country's banking system; and
protect it from illegal schemes and machinations.