2 banking and financial institution

Banking and Financial Institution

Financial System is like the heart of the human beings, if its stops working then the person is dead in the same way that if the financial system stops working, then the economy would collapse.

Philippine Financial System

It is inherent in every society the law of supply and demand. There will always be those who have surplus resources and others will have deficit. Financial System is crucial tp the allocation of these resources.

Financial System is composed of banking institutions and nonbank financial intermediaries, including commercial banks, specialized government banks, thrift banks and rural bank.

It is also composed of offshore banking units, building and loan associations, investment and brokerage houses and financial companies.

1900Act No. 52 was passed by the First Philippine Commission placing all banks under the Bureau of Treasury. The Insular Treasurer was authorized to supervise and examine banks and banking activities.

February 1929The Bureau of Banking under the Department of Finance took over the task of banking supervision.

1939A bill establishing a central bank was drafted by Secretary of Finance Manuel Roxas and approved by the Philippine Legislature. However, the bill was returned by the US government, without action, to the Commonwealth Government.

Chronology of Events: Central Banking in the Philippines

1946A joint Philippine-American Finance Commission was created to study the Philippine currency and banking system. The Commission recommended the reform of the monetary system, the formation of a central bank and the regulation of money and credit.The charter of the Central Bank of Guatemala was chosen as the model of the proposed central bank charter.

August 1947 A Central Bank Council was formed to review the

Commission’s report and prepare the necessary legislation for implementation.


February 1948 President Manuel Roxas submitted to Congress a bill “Establishing the Central

Bank of the Philippines, defining its powers in the administration of the monetary and banking system, amending pertinent provisions of the Administrative Code with respect to the currency and the Bureau of Banking, and for other purposes.

15 June 1948The bill was signed into law as Republic Act No. 265 (The Central Bank Act) by President Elpidio Quirino.

3 January 1949The Central Bank of the Philippines (CBP) was inaugurated and formally opened with Hon. Miguel Cuaderno, Sr. as the first governor.The broad policy objectives contained in RA No. 265 guided the CBP in the implementation of its duties and responsibilities, particularly in relation to the promotion of economic development in addition to the maintenance of internal and external monetary stability.


November 1972RA No. 265 was amended by Presidential Decree No. 72 to make the CBP more responsive to changing economic conditions.PD No. 72 emphasized the maintenance of domestic and international monetary stability as the primary objective of the CBP. Moreover, the CBP’s authority was expanded to include not only the supervision of the banking system but also the regulation of the entire financial system.

January 1981Further amendments were made with the issuance of PD No. 1771 to improve and strengthen the financial system, among which was the increase in the capitalization of the CBP from P10 million to P10 billion.

1986Executive Order No. 16 amended the Monetary Board membership to promote greater harmony and coordination of government monetary and fiscal policies.

3 July 1993The Bangko Sentral ng Pilipinas (BSP) was established to replace the CBP as the country’s central monetary authority.


BANKO SENTRAL NG PILIPINAS(BSP)

VisionThe BSP aims to be a world-class monetary authority and a catalyst for a globally competitive economy and financial system that delivers a high quality of life for all Filipinos.

MissionBSP is committed to promote and maintain price stability and provide proactive leadership in bringing about a strong financial system conducive to a balanced and sustainable growth of the economy. Towards this end, it shall conduct sound monetary policy and effective supervision over financial institutions under its jurisdiction.

The BSP Vision and Mission

Promote an maintain price stability Promote financial stability through

effective supervision and regulation. Ensure safety, soundness and efficiency of

the payments and settlements system.

ROLE OF BSP(3 PILLARS)

Provide an enabling environment that can address the saving, investing and borrowing needs of the public

Ensure that the enabling environment continues to nurture and protect the public’s inherent rights

Extend financial awareness programs so that the public is in the best position to make informed financial choices.

Role of Financial Regulators

Redness- Fair settlement Information-Facts needed to make an informed choice Choose-Selecting from consumer a range of products

& services Education-Acquire knowledge and skills

Consumer Rights

Critical Awareness Action Social concern Environmental Awareness Solidarity

Consumer Responsibilities

BSP LOGOThe new BSP logo is a perfect round shape in blue that features three gold stars and a stylized Philippine eagle rendered in white strokes. These main elements are framed on the left side with the text inscription “Bangko Sentral ng Pilipinas” underscored by a gold line drawn in half circle. The right side remains open, signifying freedom, openness, and readiness of the BSP, as represented by the Philippine eagle, to soar and fly toward its goal. Putting all these elements together is a solid blue background to signify stability.

Principal Element1. The Philippine Eagle, our national bird, is the

world’s largest eagle and is a symbol of strength, clear vision and freedom, the qualities we aspire for as a central bank.

2. The three stars represent the three pillars of central banking: price stability, stable banking system, and a safe and reliable payments system. It may also be interpreted as a geographical representation of BSP’s equal concern for the impact of its policies and programs on all Filipinos, whether they are in Luzon, Visayas or Mindanao.

Colors1. The blue background signifies stability. 2. The stars are rendered in gold to symbolize wisdom, wealth, idealism, and high quality. 3. The white color of the eagle and the text for BSP represents purity, neutrality, and mental clarity.

Font or Type Face Non-serif, bold for “BANGKO SENTRAL NG PILIPINAS” to suggest solidity, strength, and stability. The use of non-serif fonts characterized by clean lines portrays the no-nonsense professional manner of doing business at the BSP.

Shape Round shape to symbolize the continuing and unending quest to become an excellent monetary authority committed to improve the quality of life of Filipinos. This round shape is also evocative of our coins, the basic units of our currency.

Current Deposit Savings Deposit Fixed Deposit Recurring Deposit Miscellaneous Deposits

Bank Deposits

Also called as Demand Deposit, can be withdrawn by the depositor at any time by cheques. Current accounts do not carry any interest as the account deposited in these accounts is payable on demand without restriction.

Current Deposit

Meant for individuals who wish to deposit small amounts out of their current income. There are restrictions on the withdrawals from this accounts. Savings account holders are also allowed to deposit cheques, drafts, dividend warrants, etc. drawn in their favor for collection by the bank. To open a savings account, it is necessary for the depositor to be introduced by a person having a current or savings account with the same bank.

Saving Deposit

A deposit repayable after the expiry of specific period, which is to be determined at the time of opening of the account, it is also known as time deposit.

Fixed Deposit

Depositor is required to deposit a fixed amount of money every month for a specific period of time. Each installment may vary from Rs. 5/- Rs.500/- or more per month and the period may vary from 12 months to 10 years. After the completion of the specific period, the customer gets back all his deposits along with the cumulative interest accrued on the deposits.

Recurring Deposit

Banks have introduced several deposit schemes to attract deposits from the different types of people, like home construction deposit scheme, sickness benefit deposit scheme, children gift plan, old age pension, mini-deposit scheme, etc.

Miscellaneous Deposit

Means the unpaid balance of money or its equivalent received by a bank in the usual course of business and for which t has given or is obliged to give credit to commercial, checking, savings, time or thrift accounts.

Deposit

Means the amount due to any bona fide depositor for legitimate deposits in an insured bank net of any obligation of the depositor to the insured bank as of date of closure, but not to exceed five hundred thousand pesos (P 500,000.00 the maximum deposit.

Insured Deposit