Banking Enumeration

four basic concepts that should be considered by Management when developing policies and procedures:

Compliance Operational Needs Risk Management Improvement

QUALIFICATIONS, DUTIES, RESPONSIBILITIES AND LIABILITIES OF THE BOARD OF DIRECTORS

Pursuant to Sections 15 and 17 of R.A. No. 8791, there shall be at least five (5), and a maximum of fifteen (15) members of the board of directors of a bank/quasi-bank/trust entity two (2) of whom shall be independent directors: Provided, That in case of a bank/quasi-bank/trust entity merger or consolidation, the number of directors may be increased up to twenty-one (21).

POLICY FORMULATION

Written policies and procedures should be at the heart of every organization. It requires management of publicly traded companies to formally attest to the effectiveness of their Internal Controls. •It is certainly in the best interest of all companies, regardless of their size, to have formal, documented policies and procedures and to periodically verify that they are operating effectively. The objective of policies and procedures is to document an organization's policy for operation and the procedures necessary to fulfill that policy. Policies and Procedures answer the "what" and "how" questions for individuals within an organization. For example, "What is the company's policy regarding working from home?" and "How do I get permission to work at home?" Written documentation will allow for consistent treatment across the company. Policies and Procedures also help to create an internal control framework. It is this internal control framework that management will rely upon and that will ensure the company's objectives are being met.

The advantages of saving account are as follows:

Saving account encourages savings habit among salary earners and others who have fixed income. It enables the depositor to earn income by way of saving bank interest. Saving account helps the depositor to make payment by way of issuing cheques. It shows income of a salaried and other person earned during the year. Saving account passbook acts as an identity and residential proof of the account holder. It provides a facility such as Electronic fund transfer (EFT) to other people's accounts. It helps to do online shopping via facility like internet banking. It aids to keep records of all online transactions carried on by the account holder. It provides immediate funds as and when required through ATM. The bank offers number of services to the saving account holders.

Purpose of Credit Investigation

To validate data about a loan applicant/borrower. Credit investigation may also be done on third parties intending to establish a business relationship with the bank such as new depositors, other financial institutions and job applicants. To gather, develop and analyze enough relevant information about the borrower to aid in formulating a sound credit decision.

Costs arising from asymmetric information

1. Adverse selection 2. Moral hazard

Consumer loans

1. Auto Loan 2. Home Loan 3. Personal Loan

Financial Institutions

1. Banking Institutions 2. Non-banking Institutions

Parties Involved to a Letter of Credit

1. Buyer 2. Seller 3. Issuing Bank 4. Advising Bank 5. Negotiating Bank 6. Paying Bank 7. Confirming Bank

Appraisal of Collateral

1. Collateral 2. Appraisal 3. Market value

Agency Functions

1. Collection of Cheques, Dividends, Interests etc. 2. Payment of Subscription, Rent, Insurance Premium etc. 3. Conduct of Stock Exchange Transactions 4. Acting as Executor, Trustees, Attorneys etc. 5. Preparation of Income Tax Returns 6. Conducting Foreign Exchange Transactions 7. Acts as an Agent to the Customer 8. Advise Customers About Various Investment Opportunities 9. Act as Executor of Will 10. Electronic Transfer 11. Salary Disbursement 12. Issue Credit Card

Different Types of Credit Accommodations

1. Consumer loans 2. Commercial Loans

Commercial Loans

1. Conventional Business Loan 2. Line of Credit

Functions of Financial System

1. Direct Lending 2. Indirect Lending

How Deposits are Created

1. Fill out deposit slip and proceed to teller to deposit. 2. At a macro level, banks create deposits by extending loans. 3. When you receive a check that you want to deposit, flip it over. There are usually a few lines on one end of the check that say "Endorse Here." 4. We deposit money in a bank, and the bank turns around and loans that money out to someone.

Functions of the Credit Department

1. Gathering credit information 2. Analyzing credit information 3. Credit checking and authorization 4. Filing and recording 5. Credits adjustments 6. Collection correspondence 7. Other functions

Different Roles Banks Play in the Economy

1. Intermediation Role 2. Payments Role 3. Guarantor Role 4. Risk Management Role 5. Savings/Investment Advisor Role 6. Agency Role 7. Safekeeping/Certification of Value Role 8. Policy Role

Classifications of Letter of Credit

1. Irrevocable L/C 2. Revocable L/C 3. Deferred Payment L/C 4. Revolving Letter of credit 5. Back to back letter of credit 6. Standby L/C 7. Red Clause L/C

FOREIGN FINANCIAL SERVICES

1. Letter of Credit 2. Trust Receipt 3. Special Considerations 4. Advances to Exporters: Packing Credit 5. Bills for Collection 6. Foreign Exchange Transactions

Remedial Measures

1. Loan Restructuring 2. Compromise Settlement 3. Off-setting/Linkage 4. Strengthen Collateral Credit Position 5. Assumption of Mortgage 6. Foreclosure

Financial Markets

1. Money Market 2. Capital Market 3. Primary Market 4. Secondary Market

Persons Disqualified to Become Directors

1. Permanently Disqualified 2. Temporarily Disqualified

The Application Process

1. Pre-Approval 2. Evaluation 3. Incorporators, Subscribers, Directors and Officers 4. Post Approval

Basic Principles of Banking

1. Principle of Liquidity 2. Principle of Profitability 3. Principle of Solvency 4. Principle of Safety 5. Principle of Collection of Savings 6. Principle of Loan and Investment Policy 7. Principle of Economy 8. Principle of Providing Services 9. Principle of Secrecy 10. Principle of Modernization 11. Principle of Specialization 12. Principle of Location 13. Principle of Relation 14. Principle of Publicity

Importance of Loan Function

1. Purchasing Assets 2. Investment 3. Debt Management 4. Construction and Improvement

Key Services Provided by the Financial System

1. Risk Sharing 2. Diversification 3. Liquidity 4. Information

Kinds and Characteristics of Deposit Account

1. Savings Deposit Accounts 2. Demand Deposit Accounts 3. Time Deposit

Credit and Collection Procedure

1. Target Market Identification 2. Pre-Screening Process 3. Credit Investigation 4. Appraisal of Collateral 5. Credit Evaluation 6. Loan Packaging and Approval 7. Credit Documentation, Availments and Disbursements 8. Manner of Availment 9. Receipt and Maintenance of Credit Documents 10. Release of Collaterals and Preparation of Documents Related Thereto 11. Account Monitoring and Credit Administration 12. Remedial Account Management 13. Credit Review

Role of Financial Institutions

1. Term Transformation 2. Economies of scale and diversification in the use of funds 3. Technical Expertise

Objectives of Remedial Account Management

1. To nurse a sub-standard or doubtful account back to health 2. To regularize credit and document deficiencies

Barriers to Matching Savers and Borrowers

1. Transaction Costs 2. Information Costs

Classifications of Banks

1. Universal banks 2. Commercial banks 3. Thrift banks, composed of Savings and Mortgage Banks, Stock Savings and Loan Associations, and Private Development Banks as defined in R.A. 7906 (Thrift Banks Act ) 4. Rural banks, as defined in RA 7353 (Rural Banks Act) 5. Cooperative banks, as defined in RA 6938 (Cooperative Code) 6. Islamic banks as defined in RA 6848 (Charter of Al Amanah Islamic Investment Bank of the Philippines) 7. Microfinance banks

Watch listing

1. Watchlist Categories 2. Inclusion of directors /officers /employees in the watchlist 3. Notification of directors/officers/employees 4. Confidentiality 5. Delisting

REQUIREMENTS FOR ORGANIZING A BANK

A. The Application Process B. Opening of the Bank for Business after the Certificate of Authority to Operate has been Issued C. Start of Operations D. Revocation of Authority to Establish a Bank

Credit Review

Assess the management of credit risks. Identify areas in the credit operation that need improvement and recommend corrective action. Instill awareness adherence to credit standards and practices. Provide inputs for credit policy formulation. Provide feedback on the overall credit risk assessment.

Powers as a Corporate Body (Renumbered from Sec. 8 by R.A. 10846 June 2016

First To adopt and use a corporate seal Second To have succession until dissolved by an Act of Congress Third To make contracts Fourth To sue and be sued, complain and defend, in any court of law in the Philippines. All suits of a civil nature to which the Corporation shall be a part shall be deemed to arise under the laws of the Philippines. No attachment or execution shall be issued against the Corporation or its property before final judgment in any suit, action, or proceeding in any court. The Board of Directors shall designate an agent upon whom service of process may be made in any province or city or jurisdiction in which any insured bank is located Fifth To appoint by its Board of Directors such officers and employees as are not otherwise provided for in this Act to define their duties, fix their compensation, require bonds of them and fix penalty thereof and to dismiss such officers and employees for cause Sixth To prescribe, by its Board of Directors, by-laws not inconsistent with law, regulating the manner in which its general business may be conducted, and the privileges granted to it by law may be exercised and enjoyed Seventh To exercise by its Board of Directors or duly authorized officers or agents, all powers specifically granted by the provisions of this Act, and such incidental powers as shall be necessary to carry on the powers so granted Eighth To conduct examination of banks with prior approval of the Monetary Board: Provided, That no examination can be conducted within twelve (12) months from the last examination date: Provided however, That the Corporation may, in coordination with the Bangko Sentral, conduct a special examination as the Board of Directors, by an affirmative vote of a majority of all its members, if there is a threatened or impending closure of a bank: Provided, further, That notwithstanding the provisions of Republic Act No. 1405, as amended, Republic Act No 6426, as amended, Republic Act No. 8791, and other laws, the Corporation and/or the Bangko Sentral , may inquire into or examine deposit accounts and all information related thereto in case there is a finding of unsafe or unsound banking practice: Provided, finally, That to avoid overlapping of efforts, the examination shall maximize the efficient use of the relevant reports, information, and findings of the Bangko Sentral, which it shall make available to the Corporation. (As amended by R.A. 9302, 12 August 2004; R.A. No 9576, 01 June 2009) Ninth To act as receiver Tenth To prescribe by its Board of Directors such rules and regulations as it may deem necessary to carry out the provisions of this Act (As amended by R.A. No. 6037, 04 August 1969) Eleventh The Corporation may establish its own provident fund which shall consist of contributions made both by the Corporation and by its officers and employees to a common fund for the payment of benefits to such officers or employees or their heirs. The Board of Directors shall prepare and issue rules and regulations as it may deem necessary to make effective the establishment and operation of the fund (As amended by P.D. No. 1940, 27 June 1984) Twelfth The provision of Presidential Decree No. 1445, as amended, Executive Order No. 292, and other similar laws notwithstanding, to compromise, condone or release, in whole or in part, any claim or settled liability to the Corporation, regardless of the amount involved, under such terms and conditions as may be imposed by the Board of Directors to protect the interest of the Corporation, and to write off the Corporation's receivables and assets which are no longer recoverable or realizable Thirteenth To determine qualified interested acquirers or investors for any of the modes of resolution or liquidation of banks Fourteenth To determine the appropriate resolution method and to implement the same for a bank subject of resolution Fifteenth To determine the appropriate mode of liquidation of a closed bank and to implement the same

Qualifications of an Officer

He must be fit and proper for the position he is being proposed/appointed to. In determining whether a person is fit and proper for a particular position, the following matters must be considered: integrity/probity; competence; education; diligence; and experience/training.

Qualifications of a Director

He must be fit and proper for the position of a director of the bank/quasi-bank/trust entity

Qualifications of a Director

He must have attended a special seminar for board of directors conducted or accredited by the BSP Provided, That incumbent directors as well as those who will be elected after the approval of this circular must attend said seminar within a period of six (6) months from the date of this circular or from the date of their election, as the case may be

Qualifications of an Officer

He shall be at least a college graduate, or have at least five (5) years experience in banking or trust operations or related activities or in a field related to his position and responsibilities, or have undergone training in banking or trust operations acceptable to the appropriate supervising and examining department of the BSP: Provided, however, That trust officers shall have at least two (2) years of actual experience or training in trust operations or fund management or other related fields

Qualifications of a Director

He shall be at least twenty-five (25) years of age at the time of his election or appointment

Qualifications of an Officer

He shall be at least twenty-one (21) years of age

Qualifications of a Director

In determining whether a person is fit and proper for the position of a director, the following matters must be considered integrity/probity; competence; education; diligence; and experience/training