Malubag, Raxelle M.

BSA 4201

Activity 1 - STRUCTURE OF THE PHILIPPINES FINANCIAL SYSTEM

a. BANGKO SENTRAL NG PILIPINAS
The Republic of the Philippines' central bank is known as Bangko Sentral ng Pilipinas
(BSP). In accordance with the 1987 Philippine Constitution's requirements and the
1993's New Central Bank Act, it was founded on July 3, 1993. The BSP replaced the
Central Bank of the Philippines, which had been in place since 3 January 1949 as the
nation's primary monetary authority. The BSP is free to carry out its prescribed duties
without interference from the National Government in terms of finances and
administration.
https://www.devex.com/organizations/bangko-sentral-ng-pilipinas-bsp-69634
b. BANKING INSTITUTIONS
An institution that deals with money and its alternatives as well as other financial
services. A bank lends money and accepts deposits as part of its function as a financial
middleman. It makes money from the difference between the money it spends on
acquiring and maintaining deposits (including interest payments) and the money it
makes from interest payments to borrowers or from securities. Numerous banks offer
related services like financial management as well as goods like credit cards and mutual
funds. Some bank liabilities act as money, or as universally recognized forms of trade
and payment. https://www.britannica.com/topic/bank

i. PRIVATE BANKING INSTITUTIONS

Private banking refers to the specialized financial services and goods that retail
banks and other financial institutions provide to their high-net-worth individual
(HNWI) customers. Numerous wealth management services are included, and they
are all offered under one roof. Services offered include trust and estate planning, tax
preparation, insurance, and investment and portfolio management.
https://www.investopedia.com/terms/p/privatebanking.asp
https://www.studocu.com/ph/document/university-of-la-salette/business-
administration/pcoa005-module-2-the-philippine-financial-system/24153618

 Expanded Commercial Banks/ Universal Banks (EKB/UB)

- Is any commercial bank, which performs the investment house function in
addition to its commercial banking authority. It may invests in the equities
of allied and non-allied enterprises. Allied enterprises may either be
financial or non-financial.
 Commercial Banks or Domestic Bank (KB)
- Is any commercial bank that is confined only to commercial bank
functions such as accepting drafts and issuing letters of credit,
discounting and negotiating promissory notes, drafts and bills of
exchange, and other evidence of debt, accepting or creating demand
deposits, receiving other types of deposits and deposit substitutes, buying
 and selling foreign exchange, and gold or silver bullions, acquiring
marketable bonds and other debt securities, and extending credit subject
to such rules that the Monetary Board may promulgate.
 Thrift Banks
- A financial services company that focuses on providing people with
savings accounts and mortgage loans is known as a thrift bank, or thrift.
Others are owned by stockholders, while some are mutually owned, or
owned by their depositors. https://bizfluent.com/info-7757218-meaning-
thrift-bank.html
-
o Savings and Mortgage Banks (SMB) - is any corporation organized for
the purpose of accumulating the savings of depositors and investing
them, together with its capital, in readily marketable bonds and debt
securities.
o Private Development Banks (PDB) – is a bank that exercises all the
powers and assume all the obligations of the savings and mortgage
bank as provided in the General Banking Act except as otherwise
stated
o Stock Savings and Loan Association (SSLA) – is any corporation
engaged in the business of accumulating the savings of its members
or stockholders and using such with its capital for loans and
investment in securities of productive enterprises.

 Rural Banks- is any bank authorized by the Central Bank to accept deposits
and make credit available to farmers, businessmen and cottage industries in
the rural areas
 Cooperative Banks- are banks established to assists the various cooperatives
by lending those funds at reasonable interest rates

ii. GOVERNMENT BANKING INSTITUTIONS

 Development Bank of the Philippines (DBP) - provides loans for
developmental purposes, gives loans to the agricultural sector, commercial
sector and the industrial sector.
 Land Bank of the Philippines (LBP) – Is a government bank, which provides
financial support in the implementation of the Agrarian Reform Program
(CARP) of the government.
 Philippine Al-Amanah Islamic Investment Bank – R.A. No. 6048 provides for
the charter of the Al-Amanah Islamic Investment Bank which authorizes the
bank to promote and accelerate the socio-economic development of the
Autonomous Region of Muslim Mindanao by performing banking, financing
and investment operations.

c. NON-BANK FINANCIAL INSTITUTIONS

Financial institutions that provide a range of banking services without a banking license
are referred to as nonbank financial businesses (NBFCs), often known as nonbank
financial institutions (NBFIs). Typically, the public's readily accessible monies, including
those in checking or savings accounts, cannot be accepted as demand deposits by
these organizations. This restriction keeps them out of the purview of traditional federal
and state financial regulator scrutiny. https://www.investopedia.com/terms/n/nbfcs.asp

i. PRIVATE NON-BANK FINANCIAL INSTITUTIONS

 Investment House- is any enterprise, which engages in underwriting
securities of other corporations. It also generates income from sale of
investments in securities
 Investment Companies- they provide advice to firms issuing stocks and
bonds or considering mergers with other firms. They also engage in
underwriting in which they guarantee a price to a firm issuing stocks or
bonds and then make a profit by selling the stocks or bonds at a higher
price
 Financing Companies – is any business enterprise where the primary
purpose is to extend credit to consumers and to industrial, commercial or
agricultural entities.
 Securities dealers/brokers – any person or entity engaged in the business
of buying and selling securities for his own or its client’s account thereby
making profit from the difference between the purchase prices and selling
price of securities.
 Non-stock savings and loan associations – traditionally served individual
savers and residential and commercial mortgage borrowers, accumulate
the funds of many small savers and then lend this money to home buyers
and other types of borrowers
 Building and Loan Associations - Between the 1830s and the 1930s,
cooperatively owned financial organizations (FIs) called building and loan
associations (B&Ls) significantly extended the availability of home loans.
Participants pooled their funds under the auspices of "mutual self-help,"
typically inside small, regional B&Ls, and as a result qualified for
dividends and mortgages.
 Pawnshops- refers to persons or entities engaged in the business of
lending money with personal property, jewelry and other durable goods
as collateral for the loans given.
 Lending Investors – is any person or entity engaged in the business of
effecting securities transactions, giving loans and earns interest from
them.
 Fund Managers- A fund manager is in charge of carrying out the fund's
investing plan and overseeing the trading of its portfolio. The fund may be
run by a sole management, two co-managers, or a group of three or more
people. A percentage of the average assets under management for the
fund is used as the fee that fund managers receive for their services
 (AUM). They can be found managing money for hedge funds, mutual
funds, pension funds, and trust funds.
 Trust Companies/departments - A trust firm is a business that represents
a person or organization as a fiduciary, agent, or trustee for the
administration, management, and eventual transfer of assets to a
benefitting party. For trusts, estates, custodial arrangements, asset
management, stock transfers, beneficial ownership registration, and other
associated arrangements, the trust firm serves as a custodian.
 Insurance Companies - a financial entity that UNDERWRITES the risk of
loss or damage to real and personal property (general insurance), as well
as the danger to life and limb (life and accident insurance). While some
businesses only operate in one of these sectors, others—known as
"composites"—do business in both. Insurance firms issue insurance
policies to cover a number of contingencies (fire, water, breakage, theft,
death, etc.), involving possible financial loss to policy holders or their
dependants in return for regular payments of a premium. The way an
insurance business runs is by spreading out the risk among many
policyholders; premiums are determined by the likelihood that a specific
event will occur and the typical financial loss connected with it.
 Venture Capital Corporations- This is funding for venture capital offered to
start-up businesses with a high potential for growth by large firms. A
segment of the total venture capital market, this sort of venture capital.
Usually, funding comes from the corporation's capital budget. These
corporate venture arms either invest in projects because they have a
strategic fit with their company or for financial gain.
ii. GOVERNMENT NON-BANK FINANCIAL INSTITUTIONS
 Government Service Insurance System (GSIS)- Provides retirement
benefits, housing loans,, personal loans, emergency and calamity loans
to government employees
 Social Security Services (SSS) – provides retirement benefits, funeral
benefits, housing loans, personal loans and calamity loans to employees
who are working in private companies
 Pag-ibig – provides housing loans to both government and private
employees.