Supervision under BSP
1. Banks or banking institutions refers to those entities as defined under Section 3 of RA 8791, otherwise known as the General Banking Law of 2000, or more specifically, to entities engaged in the lending of funds obtained in the form of deposits.
a) Universal and commercial banks represent the largest single group, resource-wise, of financial institutions in the country. They offer the widest variety of banking services among financial institutions. In addition to the function of an ordinary commercial bank, universal banks are also authorized to engage in underwriting and other functions of investment houses, and to invest in equities of non-allied undertakings.
b) The thrift banking system is composed of savings and mortgage banks, private development banks, stock savings and loan associations and microfinance thrift banks. Thrift banks are engaged in accumulating savings of depositors and investing them. They also provide short-term working capital and medium- and long-term financing to businesses engaged in agriculture, services, industry and housing, and diversified financial and allied services, and to their chosen markets and constituencies, especially small- and medium- enterprises and individuals.
c) Rural and cooperative banks are the more popular type of banks in the rural communities. Their role is to promote and expand the rural economy in an orderly and effective manner by providing the people in the rural communities with basic financial services. Rural and cooperative banks help farmers through the stages of production, from buying seedlings to marketing of their produce. Rural banks and cooperative banks are differentiated from each other by ownership. While rural banks are privately owned and managed, cooperative banks are organized/owned by cooperatives or federation of cooperatives.
2. Non-bank financial intermediaries refers to persons or entities whose principal function include the lending, investing or placement of funds or evidence of indebtedness or equity deposited with them, acquired by them, or otherwise coursed through them, either for their own account or for the account of others. Qualified persons or non-bank institutions wishing to act as foreign exchange dealers (FXDs)/money changers (MCs) and/or remittance agents (RAs) are required to register with the Bangko Sentral ng Pilipinas (BSP) before they can operate as such.
Notes: I believe pawnshops (under P.D. 114) also fall under this category.
Notes: There are more number of pawnshops and RAs, total around 61,000, than banks with 11,434.
Too many people doesn't have an account in banks and they still use RAs. Even around me, there are a lot.
3. Quasi-banking functions refer to the borrowing of funds from twenty (20) or more personal or corporate lenders at any one time, through the issuance, endorsement or acceptance of debt instruments of any kind, other than deposits, for the borrower’s own account or through the issuance of certificates of assignment or similar instruments, with recourse, or of repurchase agreements for
purposes of re-lending or purchasing receivables or other similar obligations.
Notes: Single Borrower’s Limit (SBL) limits a bank’s loans to a single borrower to 25% of their total loan portfolio. In 2017, the central bank has approved the exclusion of the short-term exposures of banks to clearing and settlement banks arising from payment transactions from SBL.
Notes: Reserve requirement ratio currently stands at 20% of the total deposit and deposit substitute. Banks cannot lend out more than this ratio but BSP is planning to cut the rate as of 2017.
Notes: Bank Secrecy Law (BSL) is a legal requirement in some jurisdictions which prohibits banks providing to authorities personal and account information about their customers, except in certain conditions, such as if a criminal complaint has been filed.
Notes: Republic Act No. 10641 (An Act Allowing the Full Entry of Foreign Banks in the Philippines) allows foreign banks to operate in the Philippines through any one of the following modes of entry:
Mode 1: By acquiring, purchasing or owning up to 100% of the voting stock of an existing domestic bank.
Mode 2: By investing in up to 100% of the voting stock of a new banking subsidiary incorporated in the Philippines.
Mode 3: By establishing branches with full banking authority.
Supervision under Insurance Commission (IC)
There are insurance and re-insurance companies.