1. Lesson 7: ELECTRONIC PAYMENT
**BSP recognizes that electronic payment and financial services
contribute to economic growth thru facilitating transfer of funds which
are necessary for all productive activities.
**BSP promotes a safe, efficient, reliable, affordable, and inclusive
national payment system to support delivery of services.
Electronic Payment and Financial Services (EPFS)
- Products/services offered by BSFI to enable customers to
receive payment/initiate financial transaction thru electronic
device.
- Allow customers to electronically access information on their
transaction accounts, move/receive funds, or avail credit,
investment, trust, or other banking product/service.
Electronic Payment
- Synonymous to Electronic Fund Transfer (EFT)
- Transfers of funds between two transaction accounts in the
same/different BSFIs which are initiated and received using
electronic devices and channels to transmit payment
instructions.
- EXCLUDES domestic remittance transaction under existing BSP
regulations.
Transaction Account
- Account held/maintained with a BSFI (can be bank or non-bank)
E-money
- Electronically stored monetary value that is:
 Maintained in non-interest-bearing non-deposit account.
 Denominated in or pegged to Philippine Peso or other
foreign currencies.
 Pre-funded by customers to enable payment transactions.
 Accepted as a means of payment by the issuer and by other
persons/entities including merchant/seller.
 Issued against receipt of funds of an amount equal to the
monetary value issued.
 Represented by a claim on its issuer.
 Withdrawable in cash or cash equivalent or transferable to
other accounts/instruments that are withdrawable in cash.
Electronic Instruments or Devices
- Cash cards, prepaid cards, stored value cards or any digital
wallet accessible thru mobile phones or other access device,
and other similar products within the scope of electronic
payments and financial services.
Classifications of EMIs
- Electronic Money Issuers (EMIs) shall be classified as:
 EMI-Banks
 EMI-Non-Bank Financial Institutions (EMI-NBFI) which
includes cooperatives.
**Banks may offer e-money services subject to PRIOR approval of BSP
under Electronic Payment and Financial Services (EPFS) license and
compliance with prudential criteria.
Guidelines Governing Issuance and Operations of E-money:
- Minimum Systems and Controls
 Sound and prudent management, administrative and
accounting procedures, and adequate internal control
mechanisms.
 Properly designed computer systems
 Appropriate security policies and measures
 Robust selection criteria and due diligence process in
accrediting e-money agents, merchants/business partners
 Fraud risk management system
 Adequate business continuity and disaster recovery plan
 Effective audit function


2. - E-money shall only be issued and redeemed at face value.
 Shall not be purchased at a discount wherein the e-money
credited to the customer’s account balance is higher than
the amount used to purchase it.
 Issuance and operations denominated in foreign currency
shall be subject to existing foreign rules and regulations.
 E-money is not a deposit.
 It shall NOT earn interest and other incentives convertible
to cash.
 BSFI may offer promotional incentives NOT based on
outstanding balance of e-wallet to encourage greater usage
and attract new users.
- Consumer Protection
 BSFIs are required to strictly adhere to BSP regulations on
Financial Consumer Protection.
 BSFIs shall adhere to expectations provided under this
regulation covering:
 Disclosure and transparency of e-money
transactions
 Protection of client information
 Fair treatment of e-money customers
 Effective recourse in place for handling
complaints and redress mechanisms
 Protection of e-money consumer assets against
fraud and misuse
- Minimum Disclosure Requirements
 BSFI shall provide clear terms and conditions on the use of
e-money and made it available thru various channels (BSFI
website, brochures, and reg form)
 BSFI must obtain acknowledgement from their users and
merchants that they read the terms and conditions prior
availment of e-money services.
 Terms and conditions shall include:
 Issuer of e-money (Responsible for e-money
holders)
 Type of transactions that can be made.
 All applicable fees and charges.
 FX risks and basis of applicable exchange rates
for FX transactions (Foreign Exchange)
 Availability of user’s transaction history or SOA
 Procedures for reporting lost/stolen e-money.
 Refund policy
 Rights and responsibilities of users and
merchants
 User’s and merchant’s liability for damaged, lost,
malfunctioned, or compromised e-wallet.
 Customer service contact numbers and details of
Bangko Sentral Consumer Assistance
Mechanism
- Interoperability of Sysferns
 BSFI shall make e-money products/services/platforms with
fund transfer functionality by participating in Automated
Clearing House (ACH) pursuant to guidelines set under
National Retail Payment System (NRPS) Framework
- Aggregate Limits
 BSFIs shall adopt client categorization to implement
predefined limits and thresholds based on institutional risk
assessment and customer due diligence process.
 BSFIs participating in payment systems (PS) shall adopt
limits and thresholds.

3.  If BSFI issues several e-money instrument to a person (e-
money holder), total transactions and/or amount loaded in
all e-money instruments shall be aggregated in determining
compliance with EMIs established limit.
- Liquidity Requirement
 BSFIs shall have sufficient liquid assets to meet e-money
redemptions at all times and to protect interest of e-money
holder.
 Liquid asset should at least be equal to the amount of
outstanding e-money issued for each currency in which e-
money obligations are denominated.
List of BSP Supervised Electronic Money Issuers (EMIs)
- EMI-Banks
 Asia United Bank Corporation
 AllBank (A Thrift Bank), Inc.
 Bank of Commerce
 Bank of the Philippine Islands
 BDO Unibank, Inc.
 Cantilan Bank, Inc.
 Cebuana Lhuillier Rural Bank, Inc.
 China Banking Corporation
 CTBC Bank (Philippines) Corporation
 Development Bank of the Philippines
 Dungganon Bank (A Microfinance Rural Bank), Inc.
 East West Banking Corporation
 Equicom Savings Bank, Inc.
 First Consolidated Bank, Inc. (A Private Development Bank)
 Land Bank of the Philippines
 Maybank Philippines, Incorporated
 Metropolitan Bank & Trust Company
 Pacific Ace Savings Bank, Inc.
 Philippine Bank of Communications
 Philippine National Bank
 Philippine Savings Bank
 Rizal Commercial Banking Corporation
 Robinsons Bank Corporation
 Rural Bank of Guinobatan, Inc.
 Security Bank Corporation
 Sterling Bank of Asia, Inc. (A Savings Bank)
 UCPB Savings Bank
 Union Bank of the Philippines

4. Lesson 8: BANK STATEMENT OF CONDITION
Significance of Bank’s Statement of Condition
- Particular service bank chooses to offer, and overall size of
financial-service organization are reflected in its FS.
- FINANCIAL STATEMENTS: road map telling us where a bank has
been in the past, where it is now, and where it is headed in the
future.
- Invaluable guideposts that can signal success or disaster.
Two Main Financial Statement
- Balance Sheet (Report of Condition)
- Income Statement (Report of Income)
Overview of Bank Balance Sheets and Income Statements
- Report of Condition shows amount and composition of funds
sources (financial inputs) and how much has been allocated to
loans, securities, and other funds.
- Report of Income shows how much it has cost the bank to
acquire its deposits and other fund sources and to generate
revenues from the users the bank has made of those funds.
Bank’s Balance Sheet (Report of Condition)
- Assets on balance sheet have four types:
 Cash in the vault and deposits held at other depository
institutions (C)
 Government and private interest-bearing securities
purchased in the open market (S)
 Loans and lease financing made available to customers (L)
 Miscellaneous assets (MA)
- Liabilities fall into two principal categories:
 Deposits made by and owed to various customers (D)
 Non-deposits borrowings of funds in the money and capital
markets (NDB)
- Equity capital: represent long-term funds the owners contribute
to the bank (EC)
- C + S + L + MA = D + NDB + EC
- Cash Assets (C): designed to meet bank’s need for liquidity to
meet deposit withdrawals, customer demand for loans, and
other unexpected or immediate needs for cash.
- Security Holdings (S): backup source of liquidity and source of
income
- Loans (L): made to supply income.
- Miscellaneous Assets (MA): denominated by fixed assets owned
by bank (plant & equipment) and investments in subsidiaries.
- Deposits (D): main source of funding for banks
- Non-deposit Borrowings (NDB): carried out to supplement
deposits and provide additional liquidity that cash assets and
securities can’t provide.
- Equity Capital (EC): supplies long-term relatively stable base of
financial support where bank will rely on to grow and cover any
extraordinary losses.
Bank’s Income Statement (Report of Income)
- Indicate amount of revenue received and expenses incurred
over specific period of time (e.g., current year)
- Interest Income: principal source of bank revenue generated by
bank’s earning assets (loans and investments)
- Additional revenue: fees charged for specific services.
- Major expenses incurred in generating revenue:
 Interest paid out to depositors.
 Interest owed on non-deposit borrowings.
 Cost of equity capital
 Salaries, wages, and benefits paid to bank employees.
 Overhead expenses associated with the bank’s physical
plant.

5.  Funds set aside for possible loan losses.
 Taxes owed.
 Miscellaneous expenses.
- Net Income = Total Revenue – Total Expense
Rules Governing the Submission of Bank’s Audited Financial
Statements
- RA 8791 General Banking Act of 2000
 Section 60. Financial Statements
 Every bank, quasi-bank or trust entity shall
submit to appropriate supervising and
examining department of Bangko Sentral
financial statements in such form and frequency
as may be prescribed by the BSP.
 Statement shall show actual financial condition
of institution including results of operations.
 Section 61. Publication of Financial Statements
 Every bank, quasi-bank or trust entity shall
publish statement of its financial condition to
layman and in English or Filipino, at least once
every quarter in newspaper where the principal
office is located.
 In periods of national/local emergency or of
imminent panic which directly threaten
monetary and banking stability, the Monetary
Board, by a vote of at least 5, may allow such
bank to defer a stated period of the time the
publication of the statement of financial
condition required herein.
- Manual of Regulations for Banks (MORB)
 174. Audited Financial Statements
 BSP recognizes that external auditors play a vital
role in contributing to conduct of effective
supervision and sustaining the confidence of the
public in the financial system.
 Audited Financial Statements (AFS) shall include
the balance sheets, income statements,
statement of changes in equity, statements of
cashflows, notes to financial statements, and
opinion of external auditor.
 It will be presented side by side on a solo basis
(parent) and on consolidated basis (parent and
subsidiaries)
 175. Public Disclosures

6. Lesson 9: BRANCH BANKING
Branch Banking
- System which a bank offers services through a vast network of
branch offices.
- It makes the bank operations more diverse in order to serve all
its clients and different geographic areas/locations.
- Main branch oversees branch office’s operations, and every
branch has a manager in charge.
- Enables financial institution to extend its activities to other
locations to serve as extensions of its core functions.
Unit Banking vs. Branch Banking
- UNIT BANKING
 Bank without any branches.
 Often has limited presence and concentrates its operations
in a single geographic region.
 No provision for obtaining additional funding from other
sources, funds must be handled by the bank itself (no
external support in case of financial crisis)
 Management has the authority.
- BRANCH BANKING
 Under the main branch’s supervision.
 Vast geographical area is covered by a network of branches
scattered across several locations.
 Main branch can fund the shortfall of its branches.
 Head office makes the decision.
Branch
- Any permanent office/place of business other than the head
office where bank may perform its activities within the scope of
its authority a relevant licenses.
- Complete set of books and records shall be maintained in each
branch. (MORB)
Branch-lite Unit
- Any permanent office or place of business of a bank, other than
its head office.
- Performs limited banking activities and records its transactions
in books of the head office or the branch to which it is annexed.
(MORB)
Primary Services Provided by Branch Offices
- Opening an Account
 Account opening form must be filled out with necessary
information.
 To open an account, one must generally deposit some
minimum funds into their account.
- Deposit Acceptance
 Accepting public deposits, managing deposits, and paying
interest are key duties of branches.
- Lending
 Giving loans to customers based on their needs.
- Fund Transfer
 Transfer of money from one individual to another via
banking system.
- Keeping Valuables Secure
 Protecting the public wealth thru storing valuable in a Safe
Deposit.
Branch Personnel Duties and Responsibilities
- Branch Manager
 Professional charged with managing day-to-day operations
of a bank or financial institution’s branch.

7.  Responsibilities include developing business plans and
attaining sales goals, delivering great customer care, and
growing revenue through increased lending activity.
 Branch Manager responsibilities include:
 Directs all operational aspects including
distribution operations, customer service,
human resources, administration, and sales.
 Assesses local market conditions and identify
current and prospective sales opportunities.
 Develops forecasts, financial objectives and
business plans.
 Meets goals and metrics.
 Manages budget and allocate funds
appropriately.
 Brings out the best of branch’s personnel by
providing training, coaching, development and
motivation.
 Locates areas of improvement and propose
corrective actions that meet challenges and
leverage growth opportunities.
 Shares knowledge with other branches and
headquarters on effective practices, competitive
intelligence, business opportunities and needs.
 Addresses customer and employee satisfaction
issues promptly.
 Adheres to high ethical standards and comply
with all regulations/applicable laws.
 Networks to improve the presence and
reputation of the branch and company.
 Stays abreast of competing markets and provide
reports on market movement and penetration.
- Business Development Sales Officer (Branch Sales Officer)
 BDSO/BSO ensures achievement of his/her business
deliverable thru tactical rollout of sales strategies.