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SHADOW BANKING - activities include lending by UNREGULATED An investment company refers to any issuer which is or holds itself out as being engaged
individuals, entities charging higher than market interest rates, sale of or proposes to engage primarily in the business of investing, reinvesting or trading in
dubious securities and other investment products, as well as in-house securities
financing by real estate developers.
A UB may perform the functions of an IH either DIRECTLY or
INDIRECTLY through a SUBSIDIARY.
ESSENCE OF BANKING - 1. mobilization of deposit (through deposit-
*directly - IH functions shall be undertaken by a SEPERATE and
taking); 2. allocating resources (through lending)
DISTINCT dept or other similar unit
*UB cannot perform such functions both directly or indirectly through a
PAWNSHOPS - are NONBANK financial intermediaries.
subsidiary
- person or entity engaged in the business of lending money on personal
property delivered as security for loans
A KB may invest in NON-ALLIED enterprises ONLY WITH PRIOR
APPROVAL from the BSP
FINANCIAL INTERMEDIARIES - persons or entities whose
- PRINCIPAL FUNCTIONS include LENDING, INVESTING or PLACEMENT of
DEPOSIT SUBSTITUTES - alternative form of obtaining funds from
funds or EOI or equity deposited with them
the public, OTHER THAN DEPOSITS
- ACQUIRED by them or otherwise COURSE through them
- through the issuance, endorsement or acceptance (IEA) of debt
-either for their OWN ACCOUNT or for the ACCOUNT OF OTHERS
instruments
- for the borrowers own account
CLASSIFICATION OF BANKS
- for the purpose of RELENDING or PURCHASING or receivables or other
obligations
1. UNIVERSAL BANKS - has the authority to exercise the powers of a
commercial bank, and an investment house and invest in non-
FOREIGN STOCKHOLDINGS
allied enterprises.
FOREIGN BANKS. Modes of entry:
2. COMMERCIAL BANK -
1. by ACQUIRING, PURCHASING or OWNING (APO) 100% of the VS
of an EXISTING bank
3. THRIFT BANKS - these are a. savings and mortgage banks, b. stock
2. by INVESTING in up to 100% of the VS of a NEW banking
savings and loan association; c private development banks (thrift
subsidiary incorporated under PH law
banks act)
3. By ESTABLISHING branches with full banking authority
4. RURAL BANKS - mandated to make needed credit available and
Constitutional ban against foreigners to acquire or hold
readily accessible in the rural areas on reasonable terms and
lands of public domain
which are primarily governed by the Rural Banks Act
- FB (authorized to do banking business in the PH) shall be:
1. allowed to bid and take part in foreclosure sales or real property
5. COOPERATIVE BANKS - organized by, the majority shares of w/c is
mortgaged
owned or controlled, by cooperatives primarily to provide financial
2. Avail of enforcement and other proceedings
and credit services to cooperatives
3. Take possession of the mortgaged property, for a period not
exceeding 5yrs from actual possession
6. ISLAMIC BANKS - banks whose business dealings and activities are
*IN NO EVENT shall TITLE to the property BE TRANSFERRED to
subject to the basic principles and rulings of islamic sharia
such FB
- should the bank fail to transfer such property w/in the 5yr
7. OTHERS - PH Veterans Bank, LBP, DBP
period --> penalized 1/2 of 1% p.a of the price at w.c the
property was foreclosed
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ACCOUNT OF MINORS
Foreigners may own up to 60% of the VS in RB. - may make deposits and withdraw the same in their own right and in
In TB, foreign ownership is limited to 60%, in case of merger or their own names, and may receive dividends and interest
consolidation with a foreign holding PD 734 (Sec 1) requisites:
1. at least 7yrs old
INDEPENDENT DIRECTOR - may only serve such for a total of 5 2. Able to read and write
consecutive years 3. Sufficient discretion
A. Not or has not been an officer or employee of the bank, its 4. Not otherwise disqualified by any incapacity
subsidiaries or affiliates or RI during the past 3yrs counted from
the date of election *Guardians may prevent Thrift Banks from making deposit or interest
B. Not a D/O of the related companies of the institutions majority to the minor whom he/she is a guardian, but not to other banks
stockholder;
C. Not a SH w/ SOS sufficient to elect 1seat in the BOD of the inst or in
any of its related companies or of its majority corp SH
D. Not a REL (Leg/CL) of any DOS holding SOS sufficient to elect 1seat
in the BOD of the inst or in any of its related companies
E. Not a NOMINEE or REP of any Dir. Or substantial SH of the bank, any
of its related companies or any of its substantial SHs DOSRI
F. Not retained as prof. Adviser, consultant, agent or counsel of the Related Interest
inst, any of its related companies or any of its substantial SH
1.
BANK DEPOSITS SPOUSE/ RELATIVE w/in the 1D of C/A or RELATIVE by legal
adoption
DEMAND DEPOSITS - current accounts of the DOS of the bank
- deposits w/c are withdrawn only through the use of depositors check,
payable to the bearer of the check upon order of the depositor 2. PARTNERSHIP of w/c a DOS of a bank or his (#1), is a GENERAL
PARTNER
The absence of malice and bad faith is not a good defense
3. CO-OWNER w/ the DOS or his (#1) of the P/I/R M,P/A to secure
The loss will be borne by the one whose negligence was the PROXIMATE the loans or OCA
CAUSE of the loss except when the M,P/A covers only said co-owners undivided
interest
Mitigation of liability in case of CONTRIBUTORY negligence
4. CAF of w/c a DO of the bank or his spouse is also a DO of such
The banks liability is direct and primary. CAF, except:
- the defense of diligence in the selection and supervision of employees is a) The SECURITIES of such CAF are listed and traded in the BB
not a valid defense or CIB of DSE and less than 50% of the VS thereof is owned
by any person or by persons of related to each other w/in the
BANK ACCOUNTS 1D of C/A
b) The DOS of the bank sits as a REPRESENTATIVE of the bank in
Numbered accounts, when allowed: the BOD of such corp
-- true identity of the customer is obtained and recorded that is open to *the Bank Rep shall NOT have any equity interest in the
examination by the BSP borrower corp, except for the min.shares required by
Law/RR/bylaws
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c) The corp is atleast 99% owned by NSC
*the purpose of the loan is to finance hospitals or other MS
**the loan is fully secured
***the borrowing corp is not among those mentioned in #5,6,7,8
5. CAF of w/c any or a group of DOS of the LB and/or their (#1) hold
or own at least 20% of the SC of such Corp or of the EQUITY of
such AF.
6. CAF wholly/majority owned or controlled
By any related entity or group of related entities mentioned in #2,4,5
7. CAF w/c owns or controls
(directly or indirectly)(whether singly or as part of a group of related
interest)
at least 20% of the SC of a substantial SH of the LB, or
w/c controls majority interest of the bank
8. CAF w/c has an EXISTING MGT. CONTRACT or any similar
arrangement with the PARENT of the LB
9. NGOs/foundations (engaged in retail microfinance operations)
which are incorporated by any of the DOS of related banks
TRANSACTIONS COVERED (MORB)
1. ADV - by means of an incidental/temporary overdraft, cash item,
vale etc
2. ADV - unearned salary (in excess of 30days)
3. ADV - by means of DAUDs
4. Outstanding availments under an established CL
5. Drawings against an existing LOC
6. Acquisition of any note, draft, BOE or other EOI upon w/c the banks
DOSRI may be liable as makers, drawers, acceptors, endorsers,
guarantors or sureties
7. Indirect lending
8. Increase of an existing indebtedness
9. Sale of assets
TRANSACTIONS NOT COVERED
1. ADVANCES
- against accrued compensation
- payment of authorized travel, legitimate expenses etc
2. Increase in the amount of outstanding credit accommodations
made by the bank to protect its interest (taxes, insurance)
3. discount of BOE drawn in GF against actually existing values
Discount of commercial or business paper actually owned by the
person negotiating the same
4. Txns with foreign bank w/c has stockholdings in the local bank
*the FB acts as guarantor through the issuance of LOC or
assignment of a deposit in a currency eligible as part of the intl
reserves
5. Interbank call loan transactions
CREDIT CARD OPERATIONS APPLICABILITY
Not subject to DOSRI regulations
1. the privilege of becoming a CC holder is OPEN TO ALL qualified
persons
on the basis of SELECTIVE criteria
Which are applied by the bank to all applicants thereof
2. The banks DOSRI reimburse/pay the bank for the billed amount
in FULL on or before the payment due date
Subject to DOSRI regulation, if the banks DOSRI:
1. fails to reimburse/pay the bank within the period mentioned
herein;
2. At the outset, opt for deferred payment scheme and the
availment is booked by the bank
DOSRI loans are not prohibited - merely restricted or regulated
Rationale: Banks were not created for the benefit of their directors and
officers; they cannot use the assets of the bank for their own benefit,
except as may be permitted by law.
BANK RESERVES - that portion of the banks earnings or assets
especially kept
Either in the form of cash or near cash assets or a combination of both
For the purpose of being able to meet all circumstances relative to
banking practices
1. banks policy
2. Required by law
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ESCHEAT PROCEEDINGS - judicial process in w/c the state, by virtue of

its sovereignty, steps in and claims abandoned, left vacant or unclaimed
property,
without their being an interested person having a legal claim thereto.
- the process of depositing to the Treasurer unclaimed balances