Banking and Financial Institution

1. COMMERCIAL BANK

2. COMMERCIAL BANK
• Grant mainly short-term and long term loans
• Extended loans to traders and merchants for
transport of their goods in both domestic
and international trade.
• Biggest lenders in commercial and industrial
loans
• Traditionally term commercial bank was
applied to an institution and "current or
checking account".

3. FUNCTIONS
of
COMMERCIAL
BANK

5. 1972 the recognition and
classification of other
organized financial
institutions introduced by
financial reforms.
12 UNIVERSAL BANK IN THE COUNTRY WHICH
PERFORMS EXPANDED COMMERCIAL BANKING FUNCTIONS.

6. CLASSIFICATION OF
COMMERCIAL BANK
1.) Ordinary
2.) Expanded

7. ORGANIZATION
ANDCAPITALIZATION
Commercial bank like other corporation is
organized by at least five but not more
than fifteen persons known as
incorporators.
CORPORATORS or STAKEHOLDERS known
as owners of the bank.

8. DEPOSIT OPERATIONS

9. BORROWING OPERATIONS
BORROWING FROM BANGKO SENTRAL MAY TAKE
THE FORM OF;
1.) REDISCOUNTING
2.) DIRECT ADVANCE or LOAN

10. REDISCOUNTING
Mode of borrowing whereby the bank
assigns in favor of the Bangko Sentral
the eligible borrowers papers in
accordence with established guidlines
terms and conditions.

11. EXAMPLE

12. Loans granted
under
tthesupervised
credif
financing
programof the
government
given 100%
loan value
20,000 can be
rediscountedfo
r the same
amount of
20,000.
Loans granted
under
nonsupervise
d purposes
aregiven 80%
for purposes.
20,000n be
rediscounted
for
16,000.
MATURITY of Bangko
Sentral shallnotexceed
180 days from hthedate
the proceeds of such
rediscounts are
released.

13. DIRECT ADVANCE
or LOAN
Bangko Sentral may grant direct
advances to a commercial bank in
times of emergency or when it can
no longer be allowed to rediscount
its elligible "borrowers papers.

14. LOANS GRANTED BY A COMMERCIAL BANK MAY BE
CLASSIFIED AS FOLLOWS:
LENDING
OPERATIONS

15. 1.) AS TO COLLATERAL
a. Secured loans- loans that secured by real
mortgage.
b. Unsecured loans- loans granted against
personal security.

19. 2.) AS TO PURPOSE
a. Agricultural - loans granted tofinance
agriculturalproduction.
b. Commercial - loans granted to finance the
purchase of goods, commodities, or merchandise
for resale.
c. Industrial - loans granted to finance the
purchase and processing of raw materials and
manufacture of goods.

20. 3.) AS TO ACCOUNTING
TREATMENT
a. Demand loans - loans granted without fixed
maturity dates but which become due and
payable upon call or demand at the option of the
lending bank.
b. Bills discounted - loans are those in the
interest of which is collected in advance or
discounted from face of the covering promissory
note.
c. Time loan - loans are payable on a fixed
date or within a specufied period of time.

21. Commonly known as
universal banks which
emerged with the
introduction of financial
reform in 1980.
EXPANDED
COMMERCIAL BANK

22. EQUITY
INVESTMENT
An expanded commercial bank
mayinvest in the equity other financial
intitutions on ther following
regulationsh

23. 1.) It can own up to 100% of the voting stock of a
financial institutions performing quasi- banking.
2.)It can invest in the following financial allied
undertakings
a.) Warehousing companies, storage company, safe
deposit box companies, insurance agencies, companies
engaged in the provisions of computer services,
companies engaged in insurance brokerage and
companies providing drying and or milling facilities for
agricultural crops such as rice and corn.

27. UNDERWRITING

29. THANK
YOU!

30. Q&A
1.) Grant mainly sshort term andlong term loan
andtheyextendedloans to merchants and traders.
2-3.) A commercial bank may borrow from the Bangko
Sentral and other government and private financing
institutions. Borrowing from Bangko Sentral may take
the form of ?
4 .) It is the act or process of guaranteeing the
distribution and sale of securities of any issued by
another corporation.
5.) It is the mode of borrowing whereby the bank
assigns in favor of the Bangko Sentral the eligible
borrowers papers.