THE BANK AND NON -

BANK
INSTITUTIONS AS
SOURCES OF
FUNDS
 THE MOST COMMON SOURCES OF FUNDS

• Bank is an establishment for the deposit, custody, and issue of money,

for making loans and discounts, and or making the exchange of funds.
These under the supervision and regulated by the Bangko Sentral ng
Pilipinas (BSP). The Philippines banking system is composed of
universal and commercial banks represent the largest single group
that offer the widest variety of banking services among financial
institutions.
• Thrift banks is composed of savings, and mortgage
banks, private development banks, stock savings bank,
and loan associations and micro-finance thrift bank; and
rural and cooperative banks more popular in the rural
communities their role is to promote and expand the rural
economy by providing basic financial services and
helping farmers from buying seedlings to the marketing
of their produce.
• Credit Cooperatives is a non-bank financial organization owned
and controlled by its members, who can borrow low’ interest rates from
the amount of money they saved as a group. Credit-cooperatives provid
financial services to the poor and low income people in the countries.
The primary objective is to help improve the quality of life of its
member. Aims to provide goods and services to its member to attain
increased income, savings, investments, productivity, and purchasing
power.
• These institutions attempt to differentiate themselves by
offering above-average services along with competitive rates
in the areas of insurance, lending, and investment dealings. In
the Philippines, all cooperatives are regulated and supervised
by the Cooperative Development Authority (CDA). The BSP,
in coordination with the CDA, shall prescribe the appropriate
prudential rules and regulations applicable to the financial
service cooperatives according to Republic Act No. 9520 also
known as “Philippine Cooperative Code of 2008,”
• Commercial finance companies are a non-bank
organization that provides loans to individuals and
businesses for the purchase of inventory and
equipment. To secured a business loan the borrower
is required to pledges any assets used in the conduct
of the business as collateral. Also called asset-based
lending or asset-based finance.
OTHER SOURCES OF FUNDS

• Credit Cards are issued by a financial institution

that allows the cardholder to borrow money to
purchase with an assigned credit limit of a specific
amount during a given period. Just take note of the
high-interest rates on this source of funds.
• Pawnshops provides funds in-exchange for
collateral, usually jewelry, or other items with
value famous word “sangla”. Allows quick access
to money to every Filipinos who get through
“petsa de peligro”, need additional capital for a
small business, and financial emergencies in the
family.
• Informal lending sources ( “Five-six”) extend
loans without collateral or any documentary
requirements but charge the borrowers an
exorbitant nominal interest rate of 20 percent or
more over an agreed period.
 LOAN APPLICATION REQUIREMENTS

• 1. Demographic includes the name (or business name),

birth date, current and previous address, social security
number, taxpayer’s identification number, phone
number, and other personal identification information
such as valid government issued identification cards.
 Income or revenue refers to current personal income or employer,
• 2.

employment, and salary history, and business revenue for those whose have an
existing business.
• 3. Assets and liabilities may be asked to disclose their checking savings and
investment accounts and their outstanding loans and credit cards. For those with
existing businesses may require financial statements and business registration.
• 4. Contacts and references requiring the identification and
contact information of existing employers, previous employers, or
even nearest relative not living with the applicant (personal loan).
• 5. Attest and authorization letter affixing the applicant’s
signature on the credit application stating that all application
information is true and correct and authorizing the lender to verify
the information provided with identified contacts and references.
• Providing the above information or requirements is not a
guarantee to approve the loan applications. Several
procedures will have to perform by the credit department
to evaluate loans application may vary depending on the
lender. Most of the lender use guide questions on five Cs
of credit.
 5C’S OF CREDIT

• 1. Character is established based on the applicant’s

commitment to repay previous loans. Conduct interviews and
evaluate the filled out loan application form, NBI clearance,
Police Clearance, etc.
• 2. Capacity is the applicant’s ability to pay debt based on
income and other obligations. By evaluating income documents
such as a certificate of employment, audited financial
statements, income tax return, etc.
• 3. Collateralrefers to an asset that secures the loan.
They evaluate the value of the asset and the authenticity
of documents such a copy of the transfer certificate of
title (TCT) or condominium certificate of title (CCT),
tax declaration, building plan, etc.
• 4. Capital refers to the applicant’s financial resources. They
evaluate the statement of assets and liabilities, audited financial
statements, etc.
• 5. Condition refers to the current economic or business
conditions of the applicant’s business. Required to submit the
latest news articles relating to the company (if listed), trends in
the financial statements, business background or company profile,
etc.
 Typical loan process involves the following
• Duly accomplished application form and required documents.
• Verification of information in the application form and required documents may
include interviews.
• Checking credit history.
• Writing credit report with appropriate recommendation.
• Documenting for final decisions. If approved, final documents to be signed the
contract with terms and conditions. If rejected, a rejection letter will be sent to the
applicant.