Bill of exchange

A bill of exchange is generally used in international trade and aims at

binding one party to pay a fixed amount of money to another party at a
predestined future date. It is the most often used form of payment relating to
local and international trade. It is often extended with credit periods, such as
90 days. In addition, for a bill of exchange to be legitimate, it must be
approved by the drawee. The buyer or seller typically employs a bank to issue
the bill of exchange due to the risks involved with international transactions.
For this reason, bills of exchange are sometimes also referred to as bank
drafts.

A bill of exchange is a formal instrument that details a debtor’s debt to

a borrower. It is widely used to pay for products or services in foreign trade.
Although a bill of exchange is not a contract in and of itself, the parties
concerned will use it to carry out the terms of a contract. It will decide whether
payment is due immediately or at a later date. This must specifically state the
sum of money, the date, and the parties concerned, including the drawer and
drawee. For example, after shipping the goods, the exporter draws the bills to
the importer or, most often, the bank acting on behalf of the importer, as
agreed between the exporter and the importer. It should be noted that in some
cases, drawer and drawee may be the same person. For example, when a
Principal draws a bill on his agent, the drawer and the drawee are the same.
Similarly, drawer and payee may be the same.

Bills of exchange are like checks and promissory notes—they can

be drawn by individuals or banks and are generally transferable
by endorsements. Both financial instruments are written commitments
between a buyer and seller, or any other parties that are agreeing to a
financial transaction.

Rediscounting

Rediscounting is a standing credit facility provided by the BSP to help

banks meet temporary liquidity needs by refinancing the loans they extend to
their clients. Specifically, the rediscounting facility allows a financial institution
to borrow money from the BSP using promissory notes and other loan papers
of its borrowers as collateral. On the other hand, Rediscounting Line
establishes the maximum balance of rediscount that can be maintained by the
BSP. Electronic Rediscounting System (eRS) allows qualified banks to
conduct their rediscounting transaction and inquires with the BSP on an on-
kine and real-time basis at the convenience of their bank premises. Moreover,
through the facility, the BSP makes possible the timely delivery of credit to all
productive sectors of the economy. Moreover, rediscounting is one of the
monetary tools of the BSP to influence the volume of credit in the financial
system.
 The BSP's rediscount facilities have two categories namely, Peso
Rediscount Facility and Exporters Dollar and Yen Rediscount Facility, which
are administered by the Department of Loans and Credit (DLC). The BSP’s
Rediscount Facility is governed by Sections 281 and 282 of the Manual of
Regulations for Banks (MORB).

Commercial Bank

Commercial bank is defined as an authorized financial institution by the

law whereby they receive money from individual and businesses as well as
lending money to them. Commercial banks are open to the public and serve
individuals, institutions as well as businesses. In a more detailed explanation,
commercial banks is a financial institution which provides services including
accepting deposits, giving business loans and auto loans, mortgage lending,
as well as basic investment products such as saving accounts and certificates
of deposit.
Commercial bank has two main characteristics which are borrowing
and lending. For an instance, acceptance of deposits and lending of money to
projects to earn interest as profit. In brief, commercial banks borrow to lend.
The interest rate which offered by the commercial banks to their depositors is
called as the borrowing rate while the rate which commercial banks lend out is
called as lending rate. “Spread” refers to the difference between the rates and
is appropriated by the commercial banks. Keep in mind that not necessary all
financial institutions are commercial banks as only those which perform dual
functions of accepting deposits and giving loans are termed as commercial
banks. For an instance, post offices are not termed as a bank as they do not
give loans. The functions of commercial banks are categorized in to two
categories which are the Primary Functions and Secondary Functions.
Primary Functions include Accepting Deposits, Advancing Loans and Credit
Creation. On the other hand, Secondary Functions include Agency Functions
and General Utility Functions.

Internet bank
One of the nine major financial institutions is the Internet Bank.Internet
Banks are a fairly new addition to the financial institution market. They work
on a similar domain as retail and conventional banks. However, the underlying
difference between internet banks, and typical banks, is the fact that internet
banks rely on the virtual presence and virtual functioning, as opposed to
typical brick and mortar structures. Under internet banks, there are two
categories: digital banks and neo-banks. Digital banks are online-only
platforms affiliated with traditional banks. However, neobanks are pure digital
native banks with no affiliation to any bank but themselves.

The biggest strength of an internet bank is also its greatest weakness:

If internet access is spotty or lacking, customers cannot access their
accounts. In addition, there are security issues to keep in mind. Accessing
one’s internet bank account via an unfamiliar or unsecured public Wi-Fi
hotspot carries a certain level of risk, and there is the ever-present threat of
hackers taking down an internet bank’s website. Nearly all traditional banks
offer online banking services that are very similar or indistinguishable from
internet bank services. This helps regular banks provide banking services
beyond the footprint of their physical branch network.

Dev. Bank of the Phil

One of the Specialized Government Bank is the Development Bank of
the Philippines. n the Philippines, development financing institutions play a
pivotal role in the quest for sustainable growth and development. And at the
helm of the country’s march toward progress is the Development Bank of the
Philippines. As the country’s pre-eminent development financial institution, DBP
has taken upon itself the strategic task of influencing and accelerating
sustainable economic growth, through the provision of resources, for the
continued well-being of the Filipino people.

The DBP, under its new charter, is classified as a development bank and
may perform all other functions of a thrift bank. Its primary objective is to
provide banking services principally to cater to the medium and long-term
needs of agricultural and industrial enterprises with emphasis on small and
medium-scale industries. DBP offers a wide range of products and services
that address specific funding and banking needs of its various clients — from
project financing to a wide choice of deposit and investment products and
services. They likewise offer trade products and services, transfer and
remittance services, and treasury products and services. Loans are also
available through the Bank’s retail lending and wholesale lending operations for
capital assets investments and working capital.

Today, DBP sharpens its development focus as the country’s

Infrastructure Bank. The bank spurs national growth by funding projects that
raise the economy’s competitiveness. Focusing on sectors with the biggest and
most immediate impact on every Filipino’s well-being, DBP spearheads
infrastructure projects such as roads and highways, power and water
generation and distribution, schools, and hospitals.

Brokerage firm
One of the nine major financial institutions is the Brokerage Firm. A
brokerage firm, or simply brokerage, is a financial institution that facilitates the
buying and selling of financial securities between a buyer and a seller.
Brokerage firms serve a clientele of investors who trade public stocks and
other securities, usually through the firm's agent stockbrokers. A traditional, or
"An investment brokerage firm is a commercial enterprise, which functions like
an helps its clients in multiple aspects. An investment brokerage firm acts as
an intermediary between the buyer and the seller. It functions through a
number of investment brokers. An investment broker matches the purchasers
of investment plans with the sellers. For carrying out this function, they charge
 a fee from the client. The fee is known as commission and it is represented as
a percentage.
In the actual sense, individuals act as brokers whether in the real
estate or investment industry. They connect a buyer and seller of securities or
help clients purchase or sell securities in exchange for a fee. Individual
brokers can work for brokerage companies or function as independent agents
in an investment or real estate transaction. The essence of brokers or
brokerage firms lie in the fact that market investors or real estate buyers do
not have sufficient information required to make the best decisions. Hence,
the need to consult brokers who have accurate information about the market.

 A brokerage firm performs the role of a middleman in a transaction by

connecting buyers and sellers.
 A brokerage firm can also represent a client in a trade or buy and sell
securities on behalf of clients.
 Brokerage companies offer their services in exchange for a transaction
fee or commission.
 Brokers who have accurate information about the market can work for
brokerage firms or act as independent agents.

Savings account

A savings account is a typical account at a bank or a credit union that

allows an individual to deposit, secure, or withdraw money when the need
arises. A savings account usually pays some interest on deposits, although
the rate is quite low. There are savings accounts that offer higher rates, which
allow customers to increase their savings more quickly while keeping money
in a safe place. A savings account is the safest place to save money. Rather
than carrying a lot of cash around or hiding it at home, the money can be kept
in the bank. Cash on hand or at home can get lost very easily. It is possible
for cash to disappear from the house or be burnt by a fire.

Talking about interests in savings account, most savings accounts

accumulate a small amount of interest. In other words, banks make small
additions to their customers’ savings, usually on a monthly basis.
Nevertheless, the interest rate is dependent on the state of the economy, as
well as the bank’s competitiveness. While rates offered by banks are usually
slightly above inflation, there is a minimal risk of loss because the money is
well insured. Also, a little interest is better than no interest at all.

It is also important to have savings account for an individual to have an asy

access to his/her money. Many savings accounts offer easy access to your
account with multiple bank branches, ATM cards, mobile apps and online
banking platforms. As said, through savings accoutn, one can earn interest on
it. Financial institutions pay you interest on your savings account balance, and
many accounts offer compound interest, meaning your money can earn its own
money. Or, keep switching savings accounts to take advantage of attractive
introductory interest rates for new accounts, though most institutions will only
allow one introductory offer per customer.

Insurance company
checking account
Bankers acceptance
Bank Draft
Insurance company
Time deposit