Different

Classifications of
Banks
• Universal Banks- BALBUENA
• Commercial Banks-BANLUTA
• Thrift Banks-BAYA
• Rural Banks-BERMEJO
• Cooperative Banks-CAGANDAHAN
• Islamic and Other Banks-CANONIGO
UNIVERSAL BANKS
• Universal Banks represent the largest single
group, resource-wise, of financial institutions in
the country. They offer the widest variety of
banking services among financial institutions.
• Governed by the General Banking Law (R.A.
No. 8791)
• Capitalization Requirement: P3billion –
P20billion depending on the category

Universal Banks
• Powers of a Universal Bank include:

• to exercise the powers authorized for a commercial

bank
• the powers of an investment house as provided in
existing laws
• the power to invest in non-allied enterprises as well as
allied enterprises, be it financial or non-financial.

Universal Banks
Equity Investments of Universal Banks
• Total Investment in Allied and Non-Allied Enterprises =
50% of Net worth
• Any one enterprise = 25% of Net Worth
• Financial Allied Enterprise (thrift banks, rural banks, etc.) =
100% of equity
• Non-Financial Allied Enterprise = 100% of equity
• Single Non-Allied Enterprise = 35% of total equity or
voting stock
• Quasi-banks = 40%

Universal Banks
Institution
Land Bank of the Philippines
Australia and New Zealand Banking Group Limited
Deutsche Bank AG
ING Bank N.V.
Mizuho Bank, Ltd. - Manila Branch
Standard Chartered Bank
The Hongkong & Shanghai Banking Corporation
Asia United Bank Corporation
Rizal Commercial Banking Corporation
Security Bank Corporation

Universal Banks
COMMERCIAL
BANKS
• It is a profit-based financial institution that grants
loans, accepts deposits, and offers other financial
services, such as overdraft facilities and electronic
transfer of funds.
• are financial institutions that accept demand deposits
from the general public, transfer funds from the bank
to another, and earn profit.
• are banks given powers necessary to carry on the
business of commercial banking under the General
Banking Law (GBL) and Circular 271.

Commercial Banks
• 1. Public sector bank - Refer to a type of
commercial banks that are nationalized by the
government of a country. In public sector banks, the
major stake is held by the government

• 2. Private sector bank - Refer to a kind of

commercial banks in which major part of share capital
is held by private businesses and individuals.

• 3. Foreign banks - Refer to commercial banks that

are headquartered in a foreign country, but operate
branches in different countries.

Commercial Banks
• 1. accepting deposits

• 2. issuing letters of credits (advancing loans)

• 3. discounting and negotiating promissory notes

• 4. accepting or creating demand deposits

Commercial Banks
• 5. receiving other types of deposits and deposit
substitutes

• 6. buying and selling foreign exchange

• 7. acquiring marketable bonds and other debt securities

• 8. extending credit subject to the rules of the Monetary

Board

Commercial Banks
• 9. invest in the equities of allied enterprises

• 10. purchase, hold and convey real estate

• 11. received in custody of funds, documents and valuable

objects

• 12. acts as financial agent and buy and sell shares

Commercial Banks
• 13. make collections and payments for the accounts of
others and perform services for their customers

• 14. act as managing agent, adviser, consultant or

administrative of investment

• 15. engage in quasi-banking functions.

Commercial Banks
THRIFT BANKS
Republic Act No. 7906, Thrift Banks Act of
1995
State Policies sought to be implemented by establishing Thrift Banks:

• (a) Recognize the indispensable role of the private sector, to encourage private
• enterprise, and to provide incentives to needed investments;

• (b) Promote economic development pursuant to the socioeconomic program of the

• government, to expand industrial and agricultural growth, to encourage the
• establishment of more private thrift banks in order to meet the needs for capital, personal
• and investment credit or medium- and long-term loans for Filipino entrepreneurs;

• (c) Encourage and assist the establishment of thrift bank system which will promote
• agriculture and industry and at the same time place within easy reach of the people 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; and

• (e) Regulate and supervise the activities of thrift banks in order to place their operations
• on a sound, stable and efficient basis and to curtail or prevent acts or practices which
• are prejudicial to the public interest.

THRIFT BANKS
What are Thrift Banks?
• Under RA 7906, "Thrift banks" shall include savings and
mortgage banks, private development banks, and stock
savings and loans associations organized under existing
laws, and any banking corporation that may be organized
for the following purposes:

THRIFT BANKS
• (1) Accumulating the savings of depositors and investing them,
together with capital loans secured by bonds, mortgages in real
estate and insured improvements thereon, chattel mortgage,
bonds and other forms of security or in loans for personal or
household finance, whether secured or unsecured, or in
financing for homebuilding and home development; in readily
marketable and debt securities; in commercial papers and
accounts receivables, drafts, bills of exchange, acceptances or
notes arising out of commercial transactions; and in such other
investments and loans which the Monetary Board may
determine as necessary in the furtherance of national economic
objectives;

THRIFT BANKS
• (2) Providing short-term working capital, medium- and
long-term financing, to businesses engaged in agriculture,
services, industry and housing; and

• (3) Providing diversified financial and allied services for

its chosen market and constituencies especially for small
and medium enterprises and individuals.

THRIFT BANKS
POWERS OF THRIFT BANKS:

• (a) Accept savings and time deposits;

• (b) Open current or checking accounts: Provided, That the
thrift bank has net assets of at least Twenty million pesos
(P20,000,000) subject to such guidelines as may be established
by the Monetary Board; and shall be allowed to directly clear
its demand deposit operations with the Bangko Sentral and the
Philippine Clearing House Corporation;
• (c) Act as correspondent for other financial institutions;

THRIFT BANKS
• (d) Act as collection agent for government entities, including
but not limited to, the Bureau of Internal Revenue, Social
Security System, and the Bureau of Customs;
• (e) Act as official depository of national agencies and of
municipal, city or provincial funds in the municipality, city or
province where the thrift bank is located, subject to such
guidelines as may be established by the Monetary Board;
• (f) Rediscount paper with the Philippine National Bank, the
Land Bank of the Philippines, the Development Bank of the
Philippines, and other government-owned or –controlled
corporations. Said institutions shall specify the nature of paper
deemed acceptable for rediscount, as well as rediscounting rate
to be charged by any of these institutions; and

THRIFT BANKS
• (g) Issue mortgage and chattel mortgage certificates, buy
and sell them for its own account or for the account of
others, or accept and receive them in payment or as
amortization of its loan.
• (h) Purchase, hold and convey real estate under the same
conditions as those governing commercial banks as
specified under Section 25 of Republic Act No. 337;
• (i) Engage in quasi-banking and money market
operations;
• (j) Open domestic letters of credit;

THRIFT BANKS
• (k) Extend credit facilities to private and government employees: Provided, that
in the case of a borrower who is a permanent employee or wage earner, the
treasurer, cashier or paymaster of the office employing him is authorized,
notwithstanding the provisions of any existing law, rules and regulations to the
contrary, to make deductions from his salary, wage or income pursuant to the
terms of his loan, to remit deductions to the thrift bank concerned, and collect
such reasonable fee for his services;
• (l) Extend credit against the security of jewelry, precious stones and articles of
similar nature, subject to such rules and regulations as the Monetary Board may
prescribe; and
• (m) Offer other banking services as provided in Section 72 of Republic Act No.
337 and Republic Act No. 6426, as amended.

Thrift banks may perform the services under subsections (b), (d), (e), (g) and (i)
only upon prior approval of the Monetary Board.

THRIFT BANKS
Other Notable Provisions of RA 7906:

• Sec. 17. Tax Exemptions. — All thrift banks, whether created or organized under
this Act or in operation as of the date of effectivity of this Act, shall be exempt
from payment of all taxes, fees and charges of whatever nature and description,
except the corporate income taxes and local taxes, fees and charges for a period
of five (5) years, counted from the date of commencement of operations for thrift
banks created under this Act and from the date of the effectivity of this Act for
existing thrift banks.

• Sec. 22. Minors as Depositors. — Minors in their own rights and in their own
names may make deposits and withdraw the same, and may receive dividends and
interest: Provided, however, That, if any guardian shall give notice in writing to
any thrift bank not to make payments of deposits, dividends, or interest to the
minor of whom he is the guardian, then such payment shall be made only to the
guardian.

THRIFT BANKS
EXAMPLES OF THRIFT BANKS

• BPI FAMILY SAVINGS BANK INC

• PHIL SAVINGS BANK
• RCBC SAVINGS BANK INC
• CHINA BANK SAVINGS INC
• PNB SAVINGS BANK
• UCPB SAVINGS BANK

THRIFT BANKS
RURAL BANKS
Laws Governing Rural Banks
• REPUBLIC ACT No. 7353
• AN ACT PROVIDING FOR THE CREATION,
ORGANIZATION AND OPERATION OF RURAL BANKS,
AND FOR OTHER PURPOSES
Rural Banks, defined.
• A rural bank focuses on providing savings and credit
services to people who live in rural areas. Hopefully, the
financial products offered respond to the needs of its clients.

Rural Banks
• Functions of a Rural Bank
- government-sponsored/assisted banks which are
privately managed and largely privately owned that
provide credit facilities to farmers and merchants, or to
cooperatives of such farmers or merchants at reasonable
terms and in general, to the people of the rural
community. Micro, Small and Medium
Enterprises(MSMEs).

Rural Banks
Role of Rural Banks
• Their role is to promote and expand the rural economy in an
orderly and effective manner by providing the people in the
rural communities with basic financial services. Rural and
cooperative banks help farmers through the stages of
production, from buying seedlings to marketing of their
produce. Rural banks and cooperative banks are
differentiated from each other by ownership. While rural
banks are privately owned and managed, cooperative banks
are organized/owned by cooperatives or federation of
cooperatives. - BSP Supervised Banks/Statistics

Rural Banks
Example of Rural Banks in the
Philippines:
• One Network Bank
• EastWest Rural Bank
• Banco Dipolog

Rural Banks
COOPERATIVE
BANKS
WHAT ARE THE LAWS GOVERNING
COOPERATIVE BANKS
1. Republic Act No. 6938 “An Act to Ordain the Cooperative
Code of the PH”
2. Republic Act No. 9520 “An Act Amending the Cooperative
Code of the Philippines to be known as ‘the Philippine
Cooperative Code of 2008’.”

Cooperative Banks
• WHAT ARE COOPERATIVES
--an autonomous and duly registered association of persons, with a
common bond of interest, who have voluntarily joined together to
achieve their social, economic, and cultural needs and aspirations by
making equitable contributions to the capital required, patronizing
their products and services and accepting a fair share of the risks and
benefits of the undertaking in accordance with universally accepted
cooperative principles. (Sec. 3, R.A. 9520)
• WHAT ARE BANKS
--entities engaged in the lending of funds obtained in the form of
deposits. (Sec. 3.1, General Banking Law); must be stock
corporations and that its funds are obtained from the public through
deposits of twenty (20) or more depositors. (Sec. 8, GBL)

Cooperative Banks
• WHAT ARE COOPERATIVE BANKS
--organized primarily to provide financial and credit services
to cooperatives. It may perform services offered by a rural
bank. (BSP Circular 271, s. of 2001)
--majority of its share must be owned and controlled by
cooperatives (Art.100, R.A. 6938)

Cooperative Banks
WHAT ARE THE FUNCTIONS OF COOPERATIVE
BANKS
(1) To carry on banking and credit services for the cooperatives;
(2) To receive financial aid or loans from the Government and the
Central Bank of the Philippines for and in behalf of the cooperative
banks and primary cooperatives and their federations engaged in
business and to supervise the lending and collection of loans;
(3) To mobilize savings of its members for the benefit of the
cooperative movement;
(4) To act as a balancing medium for the surplus funds of
cooperatives and their federations;
(5) To discount bills and promissory notes issued and drawn by
cooperatives;

Cooperative Banks
 (6) To issue negotiable instruments to facilitate the activities
of cooperatives;
(7) To issue debentures subject to the approval of and under
conditions and guarantees to be prescribed by the
Government;
(8) To borrow money from banks and other financial
institutions within the limit to be prescribed by the Central
Bank; and
(9) To carry out all other functions as may be prescribed by the
Authority: Provided, That the performance of any banking
function shall be subject to prior approval by the Central Bank
of the Philippines. (Art.100, RA 6938)

Cooperative Banks
HOW MUCH IS THE MINIMUM CAPITAL
REQUIREMENT FOR COOPERATIVE BANKS
1. National Cooperative Bank- must have a minimum share
capital of P200 million; each share must have a minimum par
value of P1000/share/
2. Local Cooperative Bank-must have a minimum authorized
share capital of P20 million; each share must have a minimum
par value of P100/share

(Art.106, RA 6938)

Cooperative Banks
ISLAMIC BANKS
• What is the law governing Islamic Banks?
Republic Act No. 6848 January 26, 1990
AN ACT PROVIDING FOR THE 1989 CHARTER OF
THE AL-AMANAH ISLAMIC INVESTMENT BANK OF
THE PHILIPPINES, AUTHORIZING ITS CONDUCT OF
ISLAMIC BANKING BUSINESS, AND REPEALING
FOR THIS PURPOSE PRESIDENTIAL DECREE
NUMBERED TWO HUNDRED AND SIXTY-FOUR AS
AMENDED BY PRESIDENTIAL DECREE NUMBERED
FIVE HUNDRED AND FORTY-TWO (CREATING THE
PHILIPPINE AMANAH BANK)

ISLAMIC BANKS
• What are the powers of Islamic Banks?
The Al-Amanah Islamic Investment Bank of the Philippines, upon its
organization, shall be a body corporate and shall have the power:
(1) To prescribe its bylaws and its operating policies;
(2) To adopt, alter and use a corporate seal;
(3) To make contracts, to sue and be sued;
(4) To borrow money; to own real or personal property and introduce
improvements thereon, and to sell, mortgage or otherwise dispose of the
same;
(5) To employ such officers and personnel, preferably from the qualified
Muslim sector, as may be necessary to carry Islamic banking business;

ISLAMIC BANKS
(6) To establish such branches and agencies in provinces and cities in the
Philippines, particularly where Muslims are predominantly located, and such
correspondent offices in other areas in the country or abroad as may be necessary
to carry on its Islamic banking business, subject to the provisions of Section 2
hereof;
(7) To perform the following banking services:
• (a) Open current or checking accounts;
• (b) Open savings accounts for safekeeping or custody with no participation in
profit and losses except unless otherwise authorized by the account holders to
be invested;
• (c) Accept investment account placements and invest the same for a term with
the Islamic Bank's funds in Islamically permissible transactions on
participation basis;
• (d) Accept foreign currency deposits from banks, companies, organizations and
individuals, including foreign governments;
• (e) Buy and sell foreign exchange;
• (f) Act as correspondent of banks and institutions to handle remittances or any
fund transfers;

ISLAMIC BANKS
• (g) Accept drafts and issue letters of credit or letters of guarantee,
negotiate notes and bills of exchange and other evidence of
indebtedness under the universally accepted Islamic financial
instruments;
• (h) Act as collection agent insofar as the payment orders, bills of
exchange or other commercial documents are exclusive of riba or
interest prohibitions;
• (i) Provide financing with or without collateral by way of leasing,
sale and leaseback, or cost plus profit sales arrangement;
• (j) Handle storage operations for goods or commodity financing
secured by warehouse receipts presented to the Bank;
• (k) Issue shares for the account of institutions and companies assisted
by the Bank in meeting subscription calls or augmenting their capital
and/or fund requirements as may be allowed by law;
• (l) Undertake various investments in all transactions allowed by
Islamic Shari'a in such a way that shall not permit the haram
(forbidden), nor forbid the halal (permissible);

ISLAMIC BANKS
• (8) To act as an official government depository, or its branches,
subdivisions and instrumentalities and of government-owned
or controlled corporations, particularly those doing business in
the autonomous region;
• (9) To issue investment participation certificates, muquaradah
(non-interest-bearing bonds), debentures, collaterals and/or the
renewal or refinancing of the same, with the approval of the
Monetary Board of the Central Bank of the Philippines, to be
used by the Bank in its financing operations for projects that
will promote the economic development primarily of the
Autonomous Region;

ISLAMIC BANKS
(10) To carry out financing and joint investment operations by way of mudarabah
partnership, musharaka joint venture or by decreasing participation, murabaha purchasing
for others on a cost-plus financing arrangement, and to invest funds directly in various
projects or through the use of funds whose owners desire to invest jointly with other
resources available to the Islamic Bank on a joint mudarabah basis;
(11) To invest in equities of the following allied undertakings:
• (a) Warehousing companies;
• (b) Leasing companies;
• (c) Storage companies;
• (d) Safe deposit box companies;
• (e) Companies engaged in the management of mutual funds but not in the mutual funds
themselves; and
• (f) Such other similar activities as the Monetary Board of the Central Bank of the
Philippines has declared or may declare as appropriate from time to time, subject to
existing limitations imposed by law;
(12) To exercise the powers granted under this Charter and such incidental powers as may
be necessary to carry on its business, and to exercise further the general powers mentioned
in the Corporation Law and the General Banking Act, insofar as they are not inconsistent
or incompatible with the provisions of this Charter.

ISLAMIC BANKS
Section 16. Authorized Banking Services. - The Islamic
Bank shall exercise all the powers and perform all the
services of a bank, except as otherwise prohibited by this
Act: provided, that no transactions by any customer,
company, corporation or firm with the said Islamic Bank
shall be permitted for discounts by the Central Bank of the
Philippines.

ISLAMIC BANKS
OTHER BANKS
• The BSP likewise releases selected statistics on non
banks with quasi-banking functions . This group
consists of institutions engaged in the borrowing of funds
from 20 or more lenders for the borrower's own account
through issuances, endorsement or assignment with
recourse or acceptance of deposit substitutes for purposes
of relending or purchasing receivables and other
obligations.

OTHER BANKS
What are NBFIs
• Non-bank financial institutions (NBFIs) are financial institutions
supervised by BSP. These do not have a full banking license but they
facilitate bank-related financial services, i.e., investment, risk
pooling, contractual savings and market brokering. In the Philippines,
NBFIs are composed of the non-banks with quasi-banking functions
and non-banks without quasi-banking functions. Non-banks with
quasi-banking functions (NBQBs) consist of financial institutions
engaged in the borrowing of funds from 20 or more lenders for the
borrower’s own account through issuances, endorsement or
assignment with recourse or acceptance of deposit substitutes for
purposes of re-lending or purchasing receivables and other
obligations.

OTHER BANKS