THRIFT

THRIFT BANKING SYSTEM

composed of savings and mortgage banks, private
development banks, stock savings and loan
associations and microfinance thrift banks.
engaged in accumulating savings of depositors
and investing them.
 Provide short-term working capital, and
medium and long-term financing to
businesses engaged in agriculture,
services, industry, housing and diversified
and allied services, to their chosen
market and constituents, especially small
and medium enterprises and individuals.
Thrift banks may, at the approval of the Monetary Board,
establish banking offices (branches and extension offices)
nationwide just like commercial banks.

Thrift bank are also allowed to grant loans under the

Agrarian Reform Credit and Supervised Credit Programs of
the government.

They may invest in the equity of allied companies, and

other financial institutions serving small and medium
scale industries. These investment, are REGULATED.

A thrift bank may own up to 100% of the equity of an

allied undertaking company.
 LIST OF THRIFT BANKS IN THE
PHILIPPINES
PNB Savings Bank
Bataan Development Bank
BPI Family Savings Bank, Inc.
Century Savings Bank Corporation
Citystate Savings Bank, Inc.
Dumaguete City Development Bank, Inc.
Farmers Savings and Loan Bank, Inc.
Hiyas Banking Corporation
Inter-Asia Development Bank
Legazpi Savings Bank, Inc.
Life Savings Bank, Inc.
Bank of Makati (a Savings Bank), Inc.
Malayan Bank Savings and Mortgage Bank, Inc.
Metro-Cebu Public Savings Bank
SOURCE: http://www.bsp.gov.ph/banking/directory
Bank One Savings Corporation
BPI Direct BanKO, Inc. A savings Bank
CARD SME Bank, Inc., A Thrift Bank
China Savings Bank, Inc.
Cordillera Savings Bank, Inc.
Equicom Savings Bank, Inc.
First Consolidated Bank, Inc.
HSBC Savings Bank (Phils.), Inc.
ISLA Bank (a Thrift Bank), Inc.
Lemery Savings and Loan Bank, Inc.
Luzon Development Bank
Maritime Savings Bank Corporation
Merchants Savings & Loan Asso., Inc.
Maximum Savings Bank, Inc.
 LIST OF THRIFT BANKS IN THE
PHILIPPINES
Northpoint Development Bank, Inc.
Pacific Ace Savings Bank, Inc.
Penbank, Inc. (a Private Dev’t Bank)
Overseas Filipino Bank, Inc.
Phil Star Development Bank, Inc.
Queen City Development Bank, Inc.
RCBC Savings Bank, Inc.
Sun Savings Bank, Inc.
UCPB Savings Bank
Bangko Kabayan, Inc.
Enterprise Bank, Inc.
SOURCE: http://www.bsp.gov.ph/banking/directory
AllBank (A Thirft Bank), Inc.
Pampanga Development Bank
Philippine Business Bank, Inc.
Philippine Savings Bank
Producers Savings Bank Corporation
Quezon Coconut Bank, Inc.
Sterling Bank of Asia, Inc.
Yuanta Savings Bank Phils., Inc.
University Savings Bank, Inc.
1st Valley Bank, Inc.
Wealth Development Bank Corporation
TYPES
OF
THIFT
BANKS
SAVINGS AND MORTGAGE BANKS
Banks specializing in granting mortgage loans other than the
basic function of accepting deposits.

They are organized for the purpose of accumulating savings of

depositors and investing the same, together with its capital in
highly liquid marketable bonds and other debt securities,
commercial papers, drafts, bills of exchange, acceptances, and
other forms of security or in loans for personal or household
finance, secure or unsecure, and financing for home building
and improvement.

In addition, they may invest in other investments and loans

with the approval of Monetary Board of the Bangko Sentral ng
Pilipinas (BSP). The portfolio of savings banks consists mainly
of mortgages.
 PRIVATE DEVELOPMENT BANKS
Cater to the needs of agriculture and industry providing them
with reasonable rate loans for medium and long-term purposes.
The Philippine government has asked the assistance of
government agencies like the Development Bank of the
Phililppines (DBP), the Philippine National Bank (PNB), the
Government Service Insurance System (GSIS), the Social Security
System (SSS), and other governmental departments to help the
private development banks in their effort to uplift the economic
status of the private development bank’s clients.

They are authorized to grant real estate mortgage loans with

maturities of not more than twenty years for the purposes of the
establishment, rehabilitation and expansion of and for
investment in agricultural, industrial, manufacturing, commercial
and other economic enterprise (Fajardo, et al. 1994)
SAVINGS AND LOAN ASSOCIATIONS (SLAs,
S&Ls)
Accumulate savings of their depositors/stockholders and use
these accumulated savings, together with their capital, for
the loans that they grant and for investments in government
in private securities. These associations provide personal
finance and long-term financing for home building and
improvement.

Savings and loan associations first appeared in the 1800s so

that factory workers could save money to buy a home. They
were loosely regulated un the Great Depression, when the
US Congress passed several major laws to shore up the
banking industry and to restore the public’s trust in them.
Before 1980, SLAs were restricted to mortgages and savings and
time deposits, but the Monetary Control Act extneded their
permitted activities to commercial loans, non-mortgage
consumer lending, and trust services. Many S&Ls have been
owned by depositors, which was their main source of funding –
thus they were called Mutual Savings and Loans Associations or
Mutual Associations. Mutual S&Ls, like credit unions, used their
earnings to lower future loan rates, raise deposit rates, or
reinvest, while corporate S&Ls either reinvest profits or
returned profits to their owners by paying dividends.

Nowadays, most S&Ls are corporations, giving them access to

additional capital funding to compete more successfully and
facilitate mergers and acquisitions.
MICROFINANCE THIFT BANKS

Are small thrift banks that cater to small, micro and cottage
industries, hence, the term “micro”.

They grant small loans to small businesses, like sari-sari store,

small bakeries, cottage industries, among others.

They help uplift the standard of living in most rural areas.

Another institution that is a form of a thrift institution (though
not a bank) is the credit union.

CREDIT UNION are cooperatives organized by people from the

same organization (whether formally or informally organized)
like farmers, fishermen, teachers, sailors, employees of one
company, among others.

Credit union grant loans to these people who become members

of the credit union and get deposits from them. Usually, the
members avail of loans as a multiple (two times or three times)
of their deposits.

Cooperatives are under the supervision of Cooperative

Development Authority under the Office of the President.
Today, membership in credit unions is no longer restricted to a
certain group. Non-teachers can become members of a
teacher’s credit union, just like in other credit unions.

The loans granted to their members are no longer restricted to

short and medium term loan.

They also grant long-term loans for home buying or financing

new business.

Credit unions of today even sell life insurance and offer

investment advice. Because they only cater to members, they
are classified as non-profit organization enjoying certain tax
benefits.
THRIFT BANKS POLICIES

i. It is the policy of the State to:

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
socio-economic 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 of medium and long term credit facilities as
reasonable cost;
THRIFT BANKS POLICIES (cont.)
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.
ii. “Thrift banks” 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:
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 home
building 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;
(cont.)
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 specially for small and
medium enterprises and individuals.
iii. The following are the 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;
d. Act as official depository of national agencies and of
municipal, 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
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.
 Such mortgage and chattel mortgage certificates shall be
issued exclusively in national currency and exclusively for
the financing of equipment loans, mortgage loans for the
acquisition of machinery and other fixed installations,
conservation, enlargement or improvement of
productive properties and real estate mortgage loans for:
1. The construction, acquisition, expansion, or improvement
of rural and urban properties;
2. The refinancing of similar loans and mortgages; and
3. Such other purposes as may be authorized by the
Monetary Board.
 A thrift bank shall coordinate the amounts and
maturities of its certificates with those of its loans, so as
to ensure adequate cash receipts for the payment of
principal and interest at the time they become due. The
bank shall accept its own certificates at least at the
actual price of issue, in any prepayment of loans which
mortgage or chattel mortgage debtors may wish to
make: Provided, that the date of maturity of the
certificates is not later than the date on which the
payment would otherwise become due, in the absence
of the aforesaid prepayment.
h. Purchase, hold and convey real estate under the same
conditions as those governing commercial banks;
i. Engage in quasi-banking and money market oprations;
j. Open domestic letter of credit;
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 form 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.
The thrift bank may perform the services under b,
d, e, g and i only upon prior approval of the
Monetary Board. It may also perform commercial
banking services, operate under an expanded
banking authority, or exercise such other powers
incident to a corporation with prior approval of
the Monetary Board.