The Philippines has a comprehensive banking

system encompassing various types of banks, from

large universal banks to small rural banks and even non-
banks. At present, there are seventeen universal banks,
23 commercial banks, 84 thrift banks, 711 rural banks,
44 credit unions and twelve non-banks with quasi-banking
functions, all licensed with the Bangko Sentral ng
Pilipinas. Under Republic Act No. 8791, also known as the
General Banking Act of 2000, share roughly the same
powers.

An institution which accepts deposits, makes

business loans, and offers related services . Commercial
banks also allow for a variety of deposit accounts, such
as checking , savings, and time deposit. These
institutions are run to make a profit and owned by a
group of individuals, yet some may be members of the
Federal Reserve System. While commercial banks offer
services to individuals, they are primarily concerned with
receiving deposits and lending to businesses.

POWERS OF A COMMERCIAL BANK

In addition to having the powers

of a thrift bank, a commercial bank has
the power to accept drafts and issue
letters of credit; discount and
negotiate promissory notes, drafts,
bills of exchange, and other evidences
of debt; accept or create demand
deposits; receive other types of
deposits and deposit substitutes; buy
and sell foreign exchange and gold or silver bullion; acquire marketable
bonds and other debt securities; and extend credit.

A system of banking where banks are

allowed to provide a variety of services to their
customers. In universal banking, banks are not
limited to just loans, checking and savings
accounts, and other similar activities, but are
allowed to offer investment services as well.
Universal banking is less common in the United
States than in Europe.

Powers of a Universal Bank

A universal bank has the same powers as a
commercial bank with the following additional
powers: the powers of an investment house as
provided in existing laws and the power to invest
in non-allied enterprises.

Catering to the lower income groups,

thrift banks are primarily concerned with the mobilization of small
savings and the provision of loans at generally longer and easier
terms compared to commercial banks. Small producers such as
farmers, cottage industry entrepreneurs, and consumers rely on
these banks for financing their production and consumption
requirements. Thrift banks consist of (a) savings and mortgage
banks, (b) private development banks and (c) stock savings and
loan associations.

Powers of a Thrift Bank

A thrift bank has the power to accept savings and
time deposits, act as a correspondent with other financial
institutions and as a collection agent for government
entities, issue mortgages, engage in real estate
transactions and extend credit. In addition, thrift banks
may also maintain checking accounts, act as a depository
for government entities and local government units and
engage in quasi-banking and money market operations
subject to the approval of the Bangko Sentral.

These are government-sponsored or

assisted banks (which are privately engaged and largely
privately-owned) that provide credit facilities on
reasonable terms to farmers and merchants, or to
cooperatives of farmers and merchants, or in general, to
the people of the rural community. They are classified
into those with and without authority to accept demand .

Powers of a Rural Banks

Rural and cooperative banks are the more popular type of
banks in the rural communities. 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.

A rural bank has the power to provide adequate credit facilities to

farmers and merchants or to cooperatives of such farmers and
merchants and, in general, to the people of the rural communities
of which the rural bank operates in.

Leon Guinto Memorial College, Inc.

Atimonan, Quezon
S.Y. 2010-2011

PROJECT
IN

FINANCE

Submitted By:

Ana Nikki V. Columbres

I-BSA
 Submitted To:

Mrs. Cherrie Lou A. Dedase

~ Instructor ~