Terminologies

Cash Balance: cash in the bank adjusted for payments and receipts that have not yet cleared. .

 Vault cash – the most liquid asset held by banks ; cash on hand in the bank
 Reserve accounts – consist of the vault cash and banks’ deposit with the Central Bank
 Cash item in the process of collection – a bank’s claims on other banks for uncollected funds

Loans: a form of debt incurred by an individual or other entity. The lender—usually a corporation, financial
institution, or government—advances a sum of money to the borrower.

Banks provide commercial and consumer loans

Commercial Loans

Loan that is extended to businesses by a financial institution. Commercial loans are generally used to purchase
long-term assets or to help fund day-to-day operational costs.

Consumer Loans

A loan that is offered to consumers to finance specific types of expenditures. In other words, a consumer loan is
any type of loan made to a consumer by a creditor.
Bank deposits: consist of money placed into banking institutions for safekeeping. The account holder has the right
to withdraw deposited funds, as set forth in the terms and conditions governing the account agreement.

 Current (Demand Deposit) Account

A current account, also called a demand deposit account, is a basic checking account. Consumers deposit
money and the deposited money can be withdrawn as the account holder desires on demand.

 Savings account (passbook accounts)

Savings accounts offer account holders interest on their deposits. However, in some cases, account
holders may incur a monthly fee if they do not maintain a set balance or a certain number of deposits.

 Time Deposit Accounts

Also known as certificates of deposit, time deposit accounts tend to offer a higher rate of return than
traditional savings accounts, but the money must stay in the account for a set period of time.

 Money market account

 An interest-bearing account at a bank or credit union. Most money market accounts pay a higher interest
rate than regular passbook savings accounts and often include check writing and debit card privileges.
They also come with restrictions that make them less flexible than a regular checking account.

Banking Instruments

Check

a document that orders a bank to pay a specific amount of money from a person's account to the person in whose
name the check has been issued

Parties of Check:

 Drawer: the person or entity whose transaction account is to be drawn. The drawer is usually the
signatory.
 Payee: the person or entity who is to be paid the amount.
 Drawee: the bank or other financial institution where the check can be presented for payment.

Types of Check

 Bearer or Open Check

A bearer check is payable to whoever is the holder. It does not have any name written on it, but just the
amount authorized for withdrawal.

 Order Check

Can only be issued to the person whose name is mentioned on the cheque, and the bank will do its
background check to authenticate the cheque bearer’s identity before releasing the payment.
  Crossed Check

You may have observed checks with two parallel lines with the words ‘a/c payee’ written on the top left.
That is a crossed cheque. The lines ensure that irrespective of who presents the check, the payment will
only be made to the individual whose name is written on the check.

 Post-Dated Check

A type of check that bears a later date of being encashed. Even if the bearer presents this check to the
bank immediately after getting it, the bank will only process the payment on the date mentioned in the
check.

Causes of Dishonor of Check

Banks dishonor check for the following reasons:

 Account balance is less than amount of check

 Amount written in words differs from amount in figures
 If the check is reported as lost/ stolen
 If the court order the bank to stop the payment of any account
 If the check becomes outdated after six months of its date of issue
 Signature of the drawer is not matched with specimen signature
 Presented check has erasures

Demand Draft

An instrument issued by banks for making large payments without having to withdraw cash from one`s
account. Bank drafts are guaranteed by financial institutions and can be used by individuals to make payments
to third parties.
 Difference between Check and Bank draft

BASIS FOR
COMPARISON CHECK DEMAND DRAFT
ISSUANCE Issued by individual Issued by bank
PAYMENT Payable either to order or bearer Always payable to order of a certain person
PARTIES INVOLED Three parties- Drawer, Drawee, Payee Two Parties- Drawee Payee
CAN IT BE Yes, due to insufficient balance or other
DISHONORED? reasons No

Bill of Exchange

 A bill of exchange is a written order binding one party to pay a fixed sum of money to another party on
demand or at some point in the future.
 Includes three parties—the drawee payee and the drawer
 Used in international trade to help importers and exporters fulfill transactions.

Promissory Note

A promissory note is a financial instrument that contains a written promise by one party (the note's issuer
or maker) to pay another party (the note's payee) a definite sum of money, either on demand or at a
specified future date.
REPUBLIC ACT No. 3765

AN ACT TO REQUIRE THE DISCLOSURE OF FINANCE CHARGES IN CONNECTION WITH EXTENSIONS OF CREDIT.

 Approved: June 22, 1963

 This Act shall be known as the "Truth in Lending Act."

Information to be disclosed:

 the cash price or delivered price of the property or service to be acquired;

 the amounts, if any, to be credited as down payment and/or trade-in;
 the difference between the amounts set forth under clauses (1) and (2);
 the charges, individually itemized, which are paid or to be paid by such person in connection with the
transaction but which are not incident to the extension of credit;
 the total amount to be financed;
 the finance charge expressed in terms of pesos and centavos; and
 the percentage that the finance bears to the total amount to be financed expressed as a simple annual
rate on the outstanding unpaid balance of the obligation.

BAYANIHAN TO HEAL AS ONE ACT

AN ACT DECLARING THE EXISTENCE OF A NATIONAL EMERGENCY ARISING FROM THE

CORONAVIRUS DISEASE 2019 (COVID-19) SITUATION AND A NATIONAL POLICY IN
CONNECTION THEREWITH, AND AUTHORIZING THE PRESIDENT OF THE REPUBLIC OF THE
PHILIPPINES FOR A LIMITED PERIOD AND SUBJECT TO RESTRICTIONS, TO EXERCISE POWERS
NECESSARY AND PROPER TO CARRY OUT THE DECLARED NATIONAL POLICY AND FOR OTHER
PURPOSES
Basis of Comparison Bayanihan 1 Bayanihan 2

Period March 17 - May 31,2020 September 15- December 31,2020

Qualified to avail all existing accounts all existing current accounts

Grace Period 30 days extension from 60 days extension from

your scheduled payment your scheduled payment

Interest Payment can be on a staggered basis can be on a staggered basis

Payment of penalty No application of payment No application of payment

and other charges for current accounts only

Mandatory
Grace Period

Bayanihan to
No application Recover as One Act Staggered
of penalty fees (Republic Act No. Interest
11494) Payment

Extension of
Loan Maturities